Geospatial Insurance

23 November 2020

gis data applications for insurance

Insurance is all about managing risk, and so much of risk is related to location. Which areas are prone to the most risk, whether from natural factors or man-made conditions? Who lives in flood zone areas, where is crime highest, or which landfills contain toxic waste?

HERE (formerly known as Navteq) solutions from Navmart will help you better manage risk in your portfolio. Insurance claims are entirely location-based. Using location as the basis of risk analysis has its roots in simplicity.

Every policy you carry is associated with a location. Our solutions allow you to accurately pinpoint and verify that location as well visualize and understand its area. Using location intelligence, you can make more informed choices regarding the important topics outlined below. By utilizing GIS for insurance companies, real-time data is provided to underwriters faster — improving every aspect of decision making.

GIS technology also provides a more exact identification of legitimate versus fraudulent claims — providing accurate data for future statistical analysis. In addition, many insurance carriers and underwriters use HERE solutions to improve sales, marketing and customer service efforts. The location of agents can be mapped and analyzed to help ensure you have the market covered and are conveniently located to policyholders.

Claims adjusters can be routed effectively in times of events that lead to multiple claims. Repair shops, preferred contractors and others who service policyholders can be located quickly and easily to improve service.

GIS for measuring the level of risk in any location

When looking at geographic information to predict risk, higher-risk areas correlate with higher premiums, while lower premiums are associated with areas of less risk. There is a strong geographic element of insurance — including policyholder address management, the risk location assessment and the overall logistics of claim handling. Offering customers the services and products they need at the right price is crucial for success in the insurance industry — GIS data can allow you to attain success by doing just that.

Geospatial data allows you to gain highly detailed insights into the insurance needs of a given area. What types of insurance policies are bound to be purchased and used in a given neighborhood or ZIP code? Which communities are most vulnerable to flooding, fires and certain types of storms? By learning this information on a street-by-street, block-by-block basis, an insurance company can better serve the needs of each customer.

The information you can gather about risks like fires goes far beyond mere speculation of the stats and frequencies of past occurrences. By collecting information on local-area climate patterns and dryness/wetness trends — assessing each area one by one — you can determine which regions are currently most fire-prone due to existing fire hazards and dryness. Likewise, you can determine the risks associated with a driver’s route to work or location of a specific building.

In addition, GIS data can be overlaid to understand exposure and determine loss based on multiple factors. For example, you can heat-code maps to anticipate losses in the most at-risk areas. A heat map will indicate the highest risk areas in one color — such as a dark tone — and assign different colors to areas where risk factors are progressively less severe. A heat map can also be used to indicate densities of active policyholders on an area-by-area basis.

Geospatial data for insurance companies when setting premium rates

Today, the insurance industry is more competitive than ever because some of the more successful companies are promising great savings to customers. These savings have all been made possible by the advanced technology that providers now have at their fingertips to accurately foretell dangers and be prepared in advance for a given onslaught of claims.

Perhaps the most important area of study that GIS allows insurance companies to maximize is risk management. By determining which areas are high- and low-risk, you can determine which residents will pay higher and lower premiums.

Insurance companies utilizing GIS technology can now offer lower premiums by providing a more granulated level of detail and a comprehensive view for risk assessments of differing areas. Behaviors and patterns from demographics that were once hidden are now revealed and can be analyzed by GIS technology — allowing you to better meet the needs of your customers.

Zip code GIS data for insurance planning

Before the development of GIS technology, location-based risk assessments were simply made by county or ZIP code. Therefore, if you lived in a large county bordered on one side by a sometimes-rising river, you would pay the same premiums as the residents who lived along that river, even if you lived several miles away on a hilltop.

For car insurance companies, one of the best aspects of GIS technology has been the development of global positioning systems, which make it possible to monitor a policyholder’s driving habits. As a result, you can track the driver’s average driving speeds and know whether they tend to exceed speed limits.

This and other information — such as whether a driver makes abrupt turns, careens over speed bumps or drives aggressively in general — allows insurers to know whether a given driver will be a high risk or not and set fair and sensible premiums accordingly.

With so many companies offering “unbeatable” savings on insurance coverage, you need to utilize today’s advanced location intelligence to stay competitive and provide superior coverage by current standards. Geospatial data technology makes it possible to meet these standards because it allows you to stay current on risk factors on a by-location basis.

fire underwiring gis data

GIS in balancing overall risk in your portfolio

Geospatial data technology allows you to understand the risks in an insurance portfolio and prepare accordingly — ultimately responding to policyholders quickly and efficiently. Accurate location-based information allows for more equitable and fair insurance pricing models. This information might include:

  • Proximity to hazards and emergency services
  • Commute routes
  • Traffic patterns
  • Crime

To measure risk, insurers need solutions that efficiently and effectively manage, organize and analyze information.

One of the distinguishing factors of successful insurance companies is the ability to make accurate risk assessments. To that end, insurers must gather far more information than the one-dimensional figures insurance companies relied on in the past. Unlike spreadsheets, which only allow you to compile basic, static data, GIS technology makes it possible to gather far more complex and current information.

Advantages of GIS in insurance

For the insurance industry, the location of an incident and the addresses of those affected will directly determine which policyholders file claims. Location directly correlates to risk assessment. In order for an insurer to handle a rush of claims, the company must know what to expect and the absolute parameter of what might occur in a given event.

For example, if you provide insurance to a number of residents and business owners who live in a fire-prone area, you can determine which policyholders are in the highest-risk locations and be prepared to serve these people in the event that they file fire damage claims. Moreover, you can determine which times of year such fires are most likely to occur and be ready to act at a moment’s notice.

GIS technology also makes it possible for your company to accurately evaluate and balance risk through insurance underwriting. This way, you can determine how much coverage a customer should have and the amount in premiums that the customer should pay. Alternatively, it can help you determine whether or not a prospective customer should even have coverage.

GIS in detecting fraudulent insurance claims

Insurance fraud occurs when an individual makes fraudulent insurance claims to obtain benefits or compensation for their own personal gain. With the information that GIS technology can gather from the origination of the claim using address misrepresentation, you can distinguish legitimate from fraudulent claims with utmost accuracy.

If a falsified address is used to receive a lower premium and avoid the higher premium associated with their actual address, you will also be able to identify fraudulent activity using GIS insurance analysis:

  • If a would-be claimant contacts you from an area well outside the affected zone of a disaster, and the person has no property or loved ones in the area in question, your company will be able to determine the falsehood of the claim.
  • Statistical analysis can be utilized on the claims side to investigate suspicious behavior — enhancing the analytical component of fraud investigation techniques.

The crops insurance industry has also benefited greatly by GIS technology thanks to the development of infrared channels that allow insurers — with help from the U.S. government — to measure vegetation growth and combat crop-insurance fraud in the process.

gis prevent insurance fraud

GIS for local insurance companies handling disaster situations

The information an insurer can compile in advance of a disaster with GIS technology makes it possible to determine the number of claims that are liable to be filed in the event of a given emergency on a location-by-location basis. The way it breaks down is if the incident happens in location A, X number of people will be affected, and it will take Y amount of resources to help each claimant.

An entirely different set of numbers will apply to location B, C and so forth, and all of this information can be collected in your database and accessed the moment a disaster strikes. With all this data, you can have contingencies prepared in advance to respond to situations the moment they arise. Moreover, space and proximity information will allow your company to triage claims accurately so that the most severely affected people are reached first.

by location basis

Insurance mapping GIS for policy marketing

Even though the insurance industry has been a relative latecomer to the advantages of GIS technology, the insurers that have picked up on it have greatly lowered their risk portfolios and vastly improved their benefits packages in the process. These results are based on the fact that risks are totally location-based.

With geospatial data for insurance planning, you can more accurately market insurance, knowing which areas need coverage and where the residents are most likely to pay into their policies. All of this info is based, of course, on risk proximity, which can be identified and rated by severity on a block-by-block basis with GIS. The technology breaks risk phenomena down to a granular level.

Using geospatial and GIS data, it’s easier for insurance companies to weed out attempts at insurance fraud. If a policyholder makes a claim that is implausible according to the risk patterns in their location or someone makes repeated claims about an unlikely set of recurring incidents, GIS for mapping insurance services can be used to pinpoint these opportunistic patterns.

Start using GIS data from Navmart for insurance applications

When it comes to setting premiums and processing claims, untold amounts of money can fall through the cracks each year. On one side of the equation, policyholders are slapped with premiums too high for insufficient coverage. On the other side, insurance companies are bilked with inflated claims by opportunistic policyholders to the tune of roughly $80 billion each year. GIS data corrects these problems by making premium setting and claim processing fair and accurate for both parties.

With geospatial technology, it’s possible for insurance companies in all realms of coverage to more accurately determine risk factors on a location-by-location basis. Furthermore, it’s easier with GIS data to process claims the moment they are filed and to weed out false claims before any funds are released. To learn more about what application of GIS technology can do for your insurance business, contact us for more information on Navmart’s GIS offerings.

billions lost to fraud

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