Businesses have always known that keeping track of customers, products and assets is dependent upon location information. The insurance industry has recognized location information and analysis as a critical aspect of underwriting and servicing its clients.

With the enterprise approach to addressing business needs and the transparency of technology has come the realization that location information is a valuable asset across an organization.

Costs, values and available services are in part determined by factors of location.

It is important for carriers to establish rates and rating territories. However, they also need to account for written premiums by tax jurisdiction, and follow other geographic-based rules including countersignature, state-specific forms and mandatory coverages. And don't forget keeping track of offices, furnishings, company cars and other assets.

That's where technology comes in. Digitizing location information enables automation in storing, retrieving, analyzing and even cleaning this information, thus effectively and efficiently improving business processes.

Location intelligence has its roots in geospatial analysis. This all begins with “geocoding”–assigning a latitude and longitude value to a record containing address and/or location information–so the data can be displayed as a geographic object on a map or used in geospatial queries/analyses.

The process of geocoding involves two steps that are enormously valuable to insurance–address cleansing and address validation. The goal is to have an accurate, complete and consistent address for every customer, producer, claimant and service provider–an address that is re-usable across an organization.

Geocoding can be done at various levels of granularity from state, city, county, census tract or ZIP code level right down to the roof-top level, depending on the detail afforded by the data itself or the requirements of users for its analyses.

Once geocoded, an address can be mapped/visualized and linked with other geospatial data through queries and analysis. This serves as the foundation upon which companies begin to develop location intelligence.

For example, an underwriter can view a geocoded address in the context of other data with a geographic component–such as digitized ZIP code areas, census or rating territories. Based on what he or she sees, the underwriter could use geospatial tools to create a new rating territory or refine an existing territory to more competitively price a niche product targeted at a customer subset that includes just that area where a census tract overlaps a portion of a ZIP code.

Additionally, the underwriter can assess exposures by the location's proximity to risk factors as well as risk mitigators.

It's important to note that information rendered in a map display has an underlying database component. The visual display of data is simply one useful way to present and analyze information (queries and transformation of data can be done directly through a map interface).

Geospatial calculations, queries and analytics can also be performed on data without ever rendering the data in map form. For instance, the new rating territory the underwriter just created “on screen” through a map interface is also available in database form for use in filing or for automated underwriting rules engine calls.

Other examples of simple straightforward location analyses include:

o Distance to/from measures, such as distance from coast, brush zone or terrorist hot spot.

o Simpler yet are measures such as wind, flood or brush zones–where a location falls relative to any of these is significant to underwriting and pricing (and all can be analyzed geospatially without ever viewing a map).

With a database of geocoded addresses, location intelligence begins to mature as it is developed through the use of sophisticated analytical applications that enable users to combine the base set of addresses with multiple layers of spatially-related data.

Comparing the addresses for policies written by type and policy limit to median household income, proximity to coast and other socio-demographic layers allows an underwriter or business analyst to gain insight into market penetration, risk exposure, book composition and potential marketing opportunities, to name just a few.

The good news is that powerful location intelligence software and systems have become much more business friendly. Some desktop versions, used for in-depth analyses, as well as creating shared Web-based applications, can be mastered without extensive training or even an undergraduate degree in Geographic Information Systems.

Some flexible location intelligence solutions can integrate seamlessly with legacy mainframes, bringing a wealth of enterprise data to the user and removing a long-standing deployment obstacle for insurers.

Insurance businesses can make location-based tools available up and down the internal and external lifecycles of their insurance product offerings.

From simple customer-facing lookup tools for the nearest agent/broker, repair facility or strategic service partner to robust internally-focused producer effectiveness analysis, market penetration measures, rating territory analysis or urban accumulation thermographs–insurers can now harness the power of location information to better run their businesses.

Special Reports /

Location Technology Directs Insurers To Greater Efficiency, Higher Profitability

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