API - the key to underwrite disaster risk more efficiently and accurately?

Natural catastrophes such as hurricanes, earthquakes, floods and winter storms have become more intense and frequent in recent years, posing a threat to both people and economies worldwide. Escalating disaster events across the globe highlight an urgent issue: The costs of natural catastrophes are rising, and most of them are not covered by insurance.

This means that communities face a large and widening protection gap, especially in the world's densely populated urban centres. According to the Swiss Re Institute, the global natcat protection gap amounted to a staggering USD 172 billion in 2023 alone. One of the main reasons why underinsurance is so widespread is that too many people and businesses simply aren't aware of the risk they face or of the insurance options available to them. Equally, many insurers are reluctant to offer coverage where risk assessment is uncertain. So, how can we tackle this dual challenge and help narrow the protection gap?

An essential step is to increase risk awareness. Another priority is to integrate more accurate risk assessments in our underwriting. At Swiss Re, we use our geo tool CatNet® to address both of these concerns. We share it with our clients so that they can confidently underwrite more business using the latest risk insights anywhere on the globe.

Typically, a first meaningful measure is to get an overview of the hazards associated with each peril across all relevant locations. Hazard maps are a well-known and convenient tool to do just that – and nowadays they are usually provided with a browser tool. Swiss Re's CatNet ® is one of them, and it's been used by our clients for over a decade now.

But while it's engaging to use the data in a browser-based tool, it is often not the most efficient way to facilitate an underwriter's daily work. Instead, so-called application programming interfaces (APIs) offer a much higher degree of automation and more immediate operational support because they can feed data, maps and risk insights right into an insurer’s own underwriting tools and pricing models.

Suppose we want to underwrite risks with special care if they are in a 100 year flood, 500 year tsunami or 500 year storm surge zone. This is a perfect example of where a fully automated process using an API could greatly enhance the efficiency of the underwriting process. Instead of opening a browser tool, searching for the location and finding the right map, it is often more convenient to add a small component to your in-house underwriting system which provides all three pieces of flood data instantly.

For this reason, we built CatNet® with API functionalities built in. The APIs can be called from most tools – including integrating directly with pricing algorithms, underwriting workbenches, and core policy admin systems. The tool sends the latitude/longitude of a given location and the requested peril information to the CatNet® API to obtain informative hazard attributes back, for example flood zone indications. This also works for many different locations at the same time.

More and more of our clients are leveraging our API services to become more efficient and more accurate in their underwriting.  Much of the content covered in the API services is the same data as in CatNet® itself, and even includes flood layers from Fathom, a leading provider of water risk intelligence and flood models.

So, are APIs key to making underwriting more efficient and accurate? The answer is a resounding 'yes'.

Retrieving data from expert sources via APIs, such as those offered by Swiss Re, is an essential tool for rapidly ranking and assessing risk for new business and across existing portfolios. They are already being utilised by insurance companies across the globe to elevate risk understanding, inform pricing decisions and prioritise mitigation efforts. Swiss Re's APIs are already offering expert services at scale, and are offered through a Developer Portal for simplicity and ease of use.   

More than simply important, in today's evolving world, APIs are an essential tool – one that organisations cannot afford to live without.