Today satellites play a critical role in the financial and insurance sectors. The following are six examples illustrating the important role that satellites play:
1. Claims Assessment
When an insurance company receives a claim, it must compare the loss listed in the claim with the actual damages that occurred. Based on this information, called the event footprint, they can determine the amount of compensation that should be paid out.
Claims examiners can use Earth Observation (EO) data to evaluate damage remotely, especially when the damage is caused by a natural disaster like floods or fires. Examiners can also use EO data to better plan for in-field assessments and manage resources, making the process both more efficient and safer. Some are even using GPS-enabled drones for pre and post-event analysis and data gathering.
2. Index-based Insurance
This is an innovative and quite new way of delivering insurance – mainly for the agriculture sector – which links claims to “indices” representing observable and quantifiable phenomena. Insurance companies utilise EO images to measure such parameters, such as soil moisture and vegetation growth and compute relevant indices. When a natural disaster causes damage, they use these indexes to make a pre-specified pay-out.
3. Risk Modelling
Insurance companies have historically relied on risk modelling for everything from developing products to determining premiums. But this practice is becoming increasingly difficult due to the unpredictability brought about by climate change. To help, some companies are turning to EO.
EO can contribute to many aspects of risk modelling by including historical data providing imagery of natural events and damages hitting certain geographical areas in the past and supporting the creation of risk maps. These time series of imagery and data on parameters influencing future risks provide insurers with foresight on the future trends – and risks – created by climate change.
4. Commodities Trading
To make better and quicker decisions and to have an advantage over their competition, commodity traders must have transparency and knowledge about current and future availability versus current and future demand. With EO, commodity traders can observe the filling status of storage tanks, check the level of oil extraction activity happening at a production site, track the supply chain of base metals, monitor the loading and transport of goods, predict crop yields and even measure pollution and other factors that could impact a particular commodity.
5. Financial Risk Assessment
In finance, risk assessment is the process of analysing potential events that may result in the loss of value of an asset, loan or investment. For instance, before the start of a new infrastructure project, such as building a wind farm or bridge, investors will assess risks like location, environmental threats and regulatory issues.
While investors have long used EO data to assess immediate physical risks to a financial asset, they are now using this data to also better understand future risks related to climate change and sustainability-related issues.
6. Timing and Synchronisation
Financial services like banks and stock exchanges rely on powerful IT systems and networks that require a high level of availability, security and reliability. As such, the availability of accurate and secure timing information is very important – which is where GPS satellites come in.
Today, banks use data from GPS satellites for time stamping functions and to log events in a chronological manner, and individual stock exchange servers apply time stamps to the trades they execute and to the quotes they establish.
Source: European Union Agency for the Space Programme (EUSPA)