PERIL: a new platform for risk assessment and generation of insurance products

According to UNISDR, Italy is ranked fourth in terms of average projected losses, making it one of the most susceptible nations to catastrophic natural disasters globally. Insurance coverage is still only a very small fraction of actual damages, much below the European average despite this substantial exposure. These considerations highlight the need to invest in risk awareness and in risk management processes carried out by insurance companies and policy makers. Therefore, this work aims to create a new platform, called PERIL, that incorporates a multi-risk assessment framework, digitizing traditional risk analyses and tailoring models to the specific context of Italy. PERIL (Platform for the Evaluation of Risk: Insurtech innovation for Loss estimation) is a tool for estimating losses following natural disasters, particularly seismic and flooding events. This platform embeds up-to-date maps and models for the main natural hazards in Italy, vulnerability models for residential and industrial buildings, and it leverages computer vision algorithms to obtain detailed information on the buildings’ characteristics from satellite and street view images. All these modules are combined within PERIL into a CatNat model for calculating risk in terms of losses for seismic and flood events. Lastly, an insurance module was added, which automatically returns possible insurance products, such as insurance policies and capital estimates needed to insure the entire building portfolio. Compared to software currently in use, PERIL makes it possible for insurance companies, public administrations, and risk management bodies to carry out risk analyses remotely and at different scales, allowing them to use all the models and algorithms for risk calculation in a simple, understandable, and automatic way.