A Framework to Assess Remote Sensing Algorithms for Satellite-Based Flood Index Insurance

Remotely sensed data have the potential to monitor natural hazards and their consequences on socioeconomic systems. However, in much of the world, inadequate validation data of disaster damage make reliable use of satellite data difficult. We attempt to strengthen the use of satellite data for one application—flood index insurance—which has the potential to manage the largely uninsured losses from floods. Flood index insurance is a particularly challenging application of remote sensing due to floods’ speed, unpredictability, and the significant data validation required. We propose a set of criteria for assessing remote sensing flood index insurance algorithm performance and provide a framework for remote sensing application validation in data-poor environments. Within these criteria, we assess several validation metrics—spatial accuracy compared to high-resolution PlanetScope imagery (F1), temporal consistency as compared to river water levels (Spearman's
ρ
), and correlation to government damage data (
R
²
)—that measure index performance. With these criteria, we develop a Sentinel-1 flood inundation time series in Bangladesh at high spatial (10 m) and temporal (∼weekly) resolution and compare it to a previous Sentinel-1 algorithm and a Moderate Resolution Imaging Spectroradiometer (MODIS) time series used in flood index insurance. Results show that the adapted Sentinel-1 algorithm (F1
_avg
= 0.925,
ρ
_avg
= 0.752,
R
²
= 0.43) significantly outperforms previous Sentinel-1 and MODIS algorithms on the validation criteria. Beyond Bangladesh, our proposed validation criteria can be used to develop and validate better remote sensing products for index insurance and other flood applications in places with inadequate ground truth damage data.