Unlocking the Power of Copernicus for Parametric Insurance: Advancing Faster Wildfire Recovery
Wildfires are growing in frequency and intensity, posing a growing threat to lives, property, and economies. As climate change and land use intensify the impact of such disasters, communities and businesses need swift, reliable financial solutions to rebuild. Responding to this need, parametric insurance offers an innovative approach, providing pre-defined payouts based on easily measurable event parameters without the lengthy claims process associated with traditional insurance.
EO is reshaping the insurance industry
Unlike conventional insurance, which involves lengthy and specific post-event damage assessments, Parametric Insurance provides swift payouts based on predefined indices—such as fire intensity, burned area, or drought conditions. However, the effectiveness of this approach depends on accurate, scalable, and rapid event assessments. This is where satellite-based Earth Observation (EO) plays a critical role, offering near real-time data to ensure precise and timely insurance triggers.
Copernicus as a game changer for wildfire monitoring
Earth Observation, particularly through the European Union’s Copernicus programme, provides essential data for tracking and analysing wildfires. Using freely available Sentinel-2 optical satellite imagery and building on other work linking forest management with remote sensing tools, EUSPA supported AXA Climate in designing, and implementing specialised workflows to extract valuable insights over multiple years and adding value to existing processes.
Sentinel-2 provides high-resolution optical imagery that is particularly well-suited for wildfire assessment. Its multispectral imaging capabilities, including bands sensitive to vegetation health and thermal anomalies, enable precise mapping of burned areas. By analysing changes in near-infrared (NIR) and shortwave infrared (SWIR) reflectance, scientists can distinguish between healthy vegetation, scorched land, and actively burning areas. Sentinel-2’s frequent revisit time—capturing images of the same location every few days—ensures timely monitoring of fire evolution and recovery. While previous collaborations focused more on wildfire detection, this new workflow is instrumental in generating burn severity maps, estimating total burned area, and understanding vulnerability factors such as post-fire vegetation regrowth, all of which are crucial for parametric insurance applications.
The insights EUSPA helped to obtain through these workflows will be integrated into AXA Climate’s parametric insurance product, enabling precise and efficient wildfire risk assessment that takes into account the fact that not every fire has the same impact. Using burn severity metrics derived from Sentinel-2 will enhance the understanding of wildfire impacts on forests, improve insights into forest vulnerability and pave the way for customised insurance.
Scaling up with cloud-native Sentinel data
Looking ahead, EUSPA and AXA Climate are continuing their collaboration to explore the use of cloud-native Sentinel data in Zarr format, a cutting-edge approach that enhances scalability and accessibility. Zarr enables large amounts of data to be analysed across a long time period, leveraging the power of cloud computing. This advancement will further streamline wildfire monitoring, ensuring that insurance solutions remain responsive and adaptive in an era of escalating climate risks.
By combining satellite technology with innovative insurance solutions, this partnership is paving the way for faster, data-driven disaster recovery—helping communities rebuild with confidence in the face of growing wildfire threats and adapting to climate change.
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