How Digital Twins Help On Climate (Insurance Thought Leadership )

How Digital Twins Help On Climate

  Tuesday, March 14th, 2023 Source: Insurance Thought Leadership

Digital twins help insurers leverage high-quality data to counter unpredictable weather conditions caused by climate change.

With extreme weather events such as Hurricane Ian and its $112.9 billion of damage, and more than 7,490 wildfires recorded just in California last year, climate change is making it increasingly difficult to accurately forecast property damage risks. Insurers using obsolete, patchy or outright inaccurate data are bound to suffer significant losses.

This, in turn, has contributed to a sharp rise in premiums. Homeowner policy premiums rose 12% across the U.S. from 2021 to 2022.

Insurers can no longer rely on historical trends, so they are resorting to virtual models to simulate the impacts of future risks: The so-called digital twins are digital counterparts to real-world physical objects or properties. They can be used by insurers to assess their exposure and continue to underwrite profitably in the era of climate change.

Insurers may not be able to see into the future, but they do have access to increasingly rich and up-to-date property data. By feeding these insights into a digital twin simulation, insurers can identify the potential extent of damage to a property under different weather conditions.

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