There are a broad range of benefits in using geospatial hazard rating over traditional territorial methods, including:

Accuracy in risk assessment: Geospatial hazard rating can isolate the geographic distribution of risk at the individual residential or commercial property level, as opposed to the much larger area municipal, ZIP code and census block boundaries used in territorial methods. As such, insurers can precisely understand, underwrite, and price a specific property's risks.

Increase premiums without rate changes: Another benefit to using geospatial hazard rating instead of territorial-based rating, is the ability to respond to changes in risk levels without rate changes. When a specific area starts to see more damaging events, the corresponding hazard scores for those specific addresses will increase over time and result in a corresponding increase in premium at renewal, making some rate changes for an entire territory unnecessary.

Fairness and accuracy in pricing: With such accuracy, comes the ability to tie higher risk probabilities to higher premiums and lower risk probabilities to lower premiums automatically when geospatial hazard ratings are updated at acquisition or renewal.

Supporting data for rate changes: Although geospatial hazard rating will make it less necessary to seek rate changes for geographic changes in risk, in the event a rate change is needed, insurers will have the very detailed data needed to justify the change.

Speed and efficiency of risk assessments and policy quotes: With specific hazard ratings for every peril for every customer and prospective customer address, geospatial applications and geospatial hazard ratings enable insurers to greatly increase the speed at which they undertake property assessments and policy quotes.

New risk insights: Because geospatial data is highly structured, highly objective and collected at a high scale, insurers gain increased abilities to analyze data and identify new risk insights that are not possible with traditional territorial rating.

Reduce losses and expense ratios: Although it is early in the adoption of geospatial data, the business use cases for such applications point to a real and significant opportunity to reduce losses and improve combined ratios by better aligning price with risk — and eliminating the burden of administering territories.

Special Reports /

7 reasons geospatial-based property ratings should replace historical territory ratings