Importance of GIS in insurance

09/18/2020 3 Minutes Read

Just like almost everything else, insurance has a strong geographic component. GIS can largely benefit insurers in almost every task they undertake, be it managing the addresses of policyholders, understanding the risks associated with a particular location or handling the logistics of claims. GIS in insurance is vital as it allows the insurers to address the challenges associatedwith underwriting, reinsurance, corporate governance, sales and marketing, claims handling, customer service etc.

As Jonathan Guard, Director, Commercial Insurance, UK & Ireland, LexisNexis Risk Solutions rightly points out, “GIS solutions specifically developed for the insurance sector are playing an increasingly valuable role in enabling property insurance providers to understand perils and environmental risks, with a level of precision that goes right down to the building outline.”

More informed decisions with GIS

While developing risk profiles, location intelligence enables the insurers to get answers to vital questions such as where the assets are located, their proximity to hazards and many others. By helping them to have a more accurate estimate of risk, GIS makes it easier for the insurers to meet the needs of the customers more effectively.

Additionally, when a catastrophe occurs, GIS can significantly aid in locating policyholders and assessing the impact. Accordingly, claims processing also gets expedited. Where previously it might take days or weeks to assess the insurance market’s exposure to a climate event, today, geospatial data visualisation tools using real-time flood warning data, can quickly calculate the levels of exposure and export customer lists to help with mitigating damage from the upcoming event.

Guard continues to share, “Extreme weather events are becoming the rule rather than the exception. For the fourth consecutive year, extreme weather is considered the top global risk by likelihood over the next ten years, according to the World Economic Forum’s Global Risks Report produced in collaboration with Zurich Insurance Group[i]. In Europe, Storms Ciara and Dennis at the start of this year resulted in claims amounting to £360m[ii]. In the face of this increasing threat, the insurance sector needs accurate data at its fingertips to help manage losses, price according to changing risk in real-time, plan on the ground resources and claims support as events unfold.”

Also Read: LexisNexis: Powering the Insurance Sector with Geospatial Intelligence

GIS enables deeper assessment

In the past, when extreme weather events were relatively rare, reinsurance stepped in to provide resilience against losses. However, with the increasing frequency and severity of windstorms, tidal surges and floods, the insurance market is undertaking a deeper level of assessment at point of quote. Historical flood events, windstorm and subsidence are now part of many providers across the market’s pricing models.

Solutions such as LexisNexis®, Map View, the geospatial data visualisation tool, offer visibility into risks such as flood, windstorms, fire, subsidence and crime across the whole of an insurance provider’s book of business to help price more accurately, plan resources for extreme weather events and manage claims. Through Map View, insurance providers typically see a 50% reduction in flood exposure and 8% improvement in new business targeting.

Live data from the Environment Agency, Met Office and other organisations feed into Map View to help insurance providers visualise, track and act on what is happening in near real-time and understand where their exposures and accumulations exist. It also allows them to focus resources on supporting policyholders they have identified as being at risk from an event.

These solutions are constantly evolving to meet the insurance market’s needs. For example, the latest enhancements to Map View will allow insurance providers to assess and filter both policy and perils data so that the properties with the highest level of risk stand out. Files such as storm tracts can be imported easily; zones created to plot the location of policyholders and capacity management tools allow insurance providers to understand where they could sell more business or conversely where they already have a high volume of sums insured.

The property insurance market is facing pricing pressures that demand a deeper understanding of risk as climate change and severe weather events continue to have a significant impact on their loss ratios and how they manage their portfolio. Insurance-specific GIS solutions such as Map View allow insurance providers to understand location and property risks at a highly granular level, helping them price with pinpoint accuracy, manage their portfolio and take immediate action to limit their exposures based on real-time data.