Advances in satellite technology hold the key to addressing the data gaps that drive loss creep, says ICEYE’s Rupert Bidwell.
In recent years, the insurance and reinsurance sectors have faced a persistent and growing challenge: loss creep. This phenomenon, where the estimated financial impact of a catastrophic event gradually inflates over time, is becoming the norm rather than the exception.
Events such as the Italian hailstorms of July 2023, the 2021 floods in Germany, the 2022 French hailstorms and the 2023 Turkey/Syria earthquakes underline how significant and widespread this issue has become. In each case, early assessments significantly underestimated the eventual cost of claims, forcing reinsurers to absorb unanticipated burdens.
As the climate becomes more volatile and catastrophic events more frequent, the insurance industry can no longer rely on outdated or low-resolution data or information-starved response processes. In this context, synthetic aperture radar (SAR) satellite technology is emerging as a powerful tool to combat loss creep and bring greater speed, precision and transparency to disaster response.
THE ANATOMY OF LOSS CREEP
The root causes of loss creep are varied but interconnected. A common problem is early underestimation of losses, often driven by poor visibility into damage extent and a lack of precise exposure and location data. Many insurers rely on public information, media updates or modelled data, which do not support meaningful early assessment of impact and severity, particularly for events that are geographically widespread or for more transient perils like floods.
Inflationary pressures and supply chain disruptions that raise material and labour costs are deepening the problem. In post-disaster environments, shortages of adjusters, construction professionals and building materials delay repairs and inflate settlement costs. Additionally, the legal and social landscape continues to evolve, with extended litigation timelines and higher indemnity expectations further increasing claims over time.
In this environment, insurers are often blindsided. With limited early insight into event severity, they are unable to make informed decisions about capital allocation or claims management or provide their reinsurer partners with accurate event loss sizing. The lack of reliable, real-time data creates a dangerous lag between the disaster and the true recognition of its financial impact.
BRIDGING THE GAP WITH SAR SATELLITES
SAR satellites represent a turning point in how insurers assess damage, manage resources and reduce the financial drag of loss creep. Unlike optical satellite imagery, SAR operates around the clock and in all weather conditions, providing high-resolution images through cloud cover, smoke or heavy rain.
This means insurers no longer have to wait days or weeks for traditional aerial surveys. ICEYE delivers SAR-based insights in near real time, offering immediate understanding of a disaster’s footprint and allowing insurers to take decisive action far earlier than previously possible.
After a major storm or flood, SAR imagery enables insurers to observe the real extent of damage across regions, rather than relying on fragmented media reports or delayed claims filings. Within hours, insurers can identify severely affected areas, overlay policyholder data to determine how in-force policies have been affected, estimate potential claim volumes and mobilise adjusters and materials where needed.
This early situational awareness is especially valuable when dealing with complex claims involving multiple perils, such as combined wind and flood damage. By using SAR to pinpoint the characteristics and progression of each hazard, insurers can assign the right expertise to the right claims from the outset, improving efficiency and reducing the risk of costly misclassification.
A key advantage of SAR technology is the ability to help insurers transition from a model-based to an observation-based view of the entire event footprint. Instead of relying on historical data and “what if” projections, insurers can now anchor their estimates in what has actually happened, with verifiable geospatial evidence.
This shift dramatically improves early estimate and reserving accuracy, allowing insurers to provide their reinsurer partners with accurate event loss sizing.
STRENGTHENING RELATIONSHIPS
For reinsurers, SAR data provides much-needed transparency and certainty at a time when both are in short supply. Early access to reliable, high-resolution imagery allows reinsurers to assess potential exposure more quickly and with greater confidence.
Importantly, SAR imagery supports time-stamped event data, with each data release providing “increments of observation” that support the determination of loss timing. This is a critical element when it comes to coverage disputes or assessing whether multiple claims stem from the same insured event.
Insurers are already using SAR data to initiate reinsurance recoveries much earlier. In one case involving California wildfires, ICEYE’s SAR imagery was used to substantiate a recovery claim even before the majority of policyholder claims were filed, significantly accelerating the process and improving outcomes.
This shared situational awareness fosters greater trust and collaboration between insurers and reinsurers, shifting the dynamic from reactive negotiation to proactive problem-solving. Over time, the integration of SAR data into industry workflows has the potential to standardise best practices and reduce friction throughout the loss lifecycle.
IMPROVING REINSURER OUTCOMES
In addition, SAR data enhances internal operations by supporting faster and more accurate claims routing. The ability to assess damage severity and location quickly means that insurers can communicate proactively with affected policyholders, sometimes even before a claim is filed. This not only reduces the number of late or overlooked claims (which tend to be more expensive to settle), but also improves the customer experience at a critical moment.
Operationally, SAR imagery allows insurers to optimise their use of loss adjusters and field resources, focusing those resources in the hardest-hit areas, and deploying adjusters where they will have the greatest impact to help shorten claims cycle times and drive down costs. Further, it accelerates the deployment to hotspots of repairers, enabling insurers to lock in materials and equipment supplies earlier in the process.
FROM INNOVATION TO NECESSITY
As the global risk landscape becomes more volatile, and extreme events become more frequent and severe, the insurance industry cannot afford to continue business as usual. Loss creep is not just a financial inconvenience; it’s a systemic weakness that threatens current risk transfer models.
SAR satellite technology offers a proven, scalable solution to many of the factors that drive this problem. By delivering reliable, actionable intelligence in real time, SAR empowers the industry to respond more quickly, more accurately and with greater confidence than ever before.
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