Location, Location, Location: How Geospatial Data Is Changing the P&C Industry

If you are buying or selling a house, your realtor will tell you that the value of the property is determined by  “location, location, location.” For insurance companies, location is just as crucial.

For an underwriter to accurately assess the risk on a property, it is essential that they consider the location of the property. How close is it to the coastline? Is it on a flood plain? Where is the nearest fire station? It is even important to know the types of businesses that surround the property. For example, if a clothing manufacturer is next door to a fireworks store, it is at greater risk than if it is next door to a store that sells sports equipment. Traditionally, underwriters have relied on a combination of application data from the insured or agent and information from local adjusters. Now, underwriters have the advantage of supplementing that information with geospatial data, which has many benefits.

Of course, it is impossible to predict exactly where a natural disaster will hit. However, quickly estimating the exposure is essential when a catastrophe strikes. A few years ago, when torrential rain inundated the Canadian city of Calgary, one local carrier used data visualization to quickly determine which customers were most affected. By combining policy data with geocoding software, claims executives created a dashboard to easily monitor the amount of incoming claims. This resulted in speedier claim fulfillment, lower fraud rates, and better customer retention.

Location analytics has many other business applications within insurance. One example is marketing. Insurance companies have always created customer segmentation. But now insurance companies can create microsegmentation down to a hyperlocal level. Overlaying internal customer data with behavioral and demographic information, marketing analysts can identify gaps in the sales cycle (for potential customers) and untapped opportunities.

Another example is using geospatial data combined with visualization software to quickly find emerging trends in fraudulent and suspicious activities. For instance, analyzing the claims data can reveal outliers or anomalies.

Despite these many use cases, geospatial data has been an underutilized tool in the insurance technology stack. Fortunately, it appears that the industry’s best kept secret is finally out.

Over the past 12 months, maybe as a consequence of the pandemic, there has been considerable investment in the technology. Recently, as seen in the news, HOVER is working with Amica to transform underwriting inspections. HazardHub posted record-setting revenue. Cape Analytics announced a strategic partnership with American Integrity. And other vendors in this growing space are Betterview, Zesty.ai, and Korem

To learn more, download our recent report on the subject, Locational Data: The Eyes of the World for P&C Carriers.

Geospatial data and location analysis empower underwriters, adjusters, and marketing specialists to better assess risk, be more efficient, and increase revenue. Are you using it?

For further discussions, connect with me on LinkedIn.

 

How can we help?

If you have a question specific to your industry, speak with an expert.  Call us today to learn about the benefits of becoming a client.

Talk to an Expert

Receive email updates relevant to you.  Subscribe to entire practices or to selected topics within
practices.

Get Email Updates