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Geocoding provides a set of coordinates for each address, with the goal of allowing the insurer to understand the location of each building that is being insured and its proximity to various peril zones. (Shaynepplstockphoto/Shutterstock) Geocoding provides a set of coordinates for each address, with the goal of allowing the insurer to understand the location of each building that is being insured and its proximity to various peril zones. (Shaynepplstockphoto/Shutterstock)

In the real estate market, it is often said that the three most important factors are location, location, and location. A similar argument could be made for insurance property underwriting.

Of course, the attributes of the property itself are important — and there is a lot of buzz in the industry about creating comprehensive property attributes. In order for insurers to calculate the probabilities of various risks and repair/replacement costs, it is essential to have data on many specific characteristics of the property, such as square feet/meters, exterior and interior building materials, roof shape, foundation type and size, the presence of pools or fences, and many other features. However, these data points must be associated with the correct address before any adequate analysis can be conducted. This is where geocoding comes into play.

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