Hazard data enhancements reduce risk and improve service

What's different today

When geospatial data first arrived, it was primarily used by the big insurers who could afford to have a geographic information systems (GIS) team to develop or purchase the information, integrate the information, build decision models and monitor usage.

Today, DaaS allows any company to get its hazard questions answered quickly and easily, as needed. For example, at time of quote: What is this policy exposed to? How far is it from a fire station? What's the distance to coast? What rating territory or premium tax area is it in?

Knowing this information at the time of quote saves the embarrassment of an initial rate quote moving dramatically upwards if this information is instead only used at time of binding.

Related: Changing the claims process with digitized police report data

Educating customers builds sales

Most customers are unaware of the specific hazard exposures for their property, both personal and commercial.  Hazard information allows insurers to better educate customers. A neatly formatted online report featuring hazard data provided by your company helps educate customers and better prepare them to mitigate risk.

The data on a property in New Smyrna Beach, Florida, (shown at right) provides as example. 

In looking at this property, an insurer can instantly tell that there will be insurability issues.  There would be a number of proactive steps you would encourage this policyholder to take. 

• • • • • Unprotected for fire? Add fire extinguishers
        • High risk of wildfire? Take mitigation steps
        • Wind borne debris? Add shutters
        • Impacts of convective storms and hurricanes? Add roof ties, lightning rods, and explore  mitigation information to uncover other options

On the plus side, there's no storm surge risk and minimal risk from flood. The agent knows that a water claim is unlikely.

Related: 3 ways for insurance agents to use data analytics to drive growth

Geographic risk and hazard data provides an advantage for today's insurers. (Photo: iStock)

The data advantage

An insurer wanted to sell flood insurance to prospects that were in flood zones but not likely to flood, and also those not in flood zones but likely to flood. The firm had three primary targets: properties in 100-year flood zones that were not likely to flood, properties in a 500-year flood zone that were not likely to flood, and properties in FEMA minimal risk zones that were likely to flood.

The insurer realized it needed a way to understand current FEMA designations for target properties while incorporating an independent evaluation of flood likelihood.

Sample data is illustrated in the chart below. The target sales list was developed by selecting B and C score prospects from the 100-year and 500-year flood plains, and D and F score prospects from the minimal risk flood zones. This scoring was available nationwide, providing the insurer with the ability to selectively target customer types based on their interest from a risk exposure perspective.

This example features flood data, however any natural hazard can be similarly mapped for both personal as well as commercial properties.

Competing with a more comprehensive customer profile

By accessing geographic risk-sets in real-time, natural hazard data such as wind, fire, water, or earthquake risk can be easily associated with specific properties. Ideally, this is coupled with property and mortgage data enhancements, as well as location intelligence toolsets, such as address verification, geocoding and reverse geocoding, and IP location. By tapping into multi-sourced datasets, insurers have real-time access to hundreds of different metrics on individual residential or commercial properties. Hazard data scores are based on information from sources such as FEMA, NOAA, USGS, and state and local governments, and include risk of flooding, wildfire, lightning strikes, straight-line winds, hurricanes, tornadoes, earthquakes, and more. 

For example, you may not insure for flood or earthquake, but knowing the risk exposure to those hazards and your ability to educate your prospective customer on them can separate you from your competitors. While this has always been the case for the use of hazard data, the difference today is that hazard data is now a real-time asset, helping insurers make internal risk assessments as part of policy services. It's a higher level of insight for insurance professionals, making decisions based on end-to-end property intelligence supported by precise risk scores made easier through hazard DaaS.

Greg Brown is vice president of marketing at Melissa, provider of global contact data quality and identity verification solutions that unlock accurate data for the most compelling customer view. He can be reached by sending email to greg.brown@melissa.com.

The opinions expressed here are the writer's own.

See also:

3 ways for insurance agents to use data analytics to drive growth

The telematics advantage: driving data on the spot