Gaining a Data Advantage: Hazard Data Enhancements Reduce Risk and Improve Service
Melissa Team | Data Enhancement, Data Enrichment, Data Integration, Data Quality, hazard data, Hazard Hub |
Hindsight is, as we know, 20/20. But, what if, when it came to natural hazards
and their impact on your portfolio, you didn’t have to rely on hindsight? What if, you could understand your risks and
exposures before an event occurred and write and plan appropriately? Wouldn’t that be better than hoping and
praying that nothing bad happened?
Of course it would. And we all know that bad things still happen
no matter how much hoping and praying goes on.
That said, how many companies truly use hazard data in their everyday
processes? Sadly, very few. For a large number of insurers either cost or
technology or both keeps them from making use of some of the most effective
data for pricing a policy, validating claims, and knowing your true exposure.
This probably isn’t news that extensive
property level data can enable a great level of risk awareness and location
intelligence which in turn reduces risk for insurers while improving customer
communications and service. But what is
news is that this risk information is now more available and easily accessible
than ever before, enabling more insurers to take advantage of it.
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. But thanks to technologies companies can now
get a hazard answer for just about any hazard easily through Data as a Service
(DaaS).
With DaaS you get answers to the hazard
questions you have, when you have them.
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 only used at time of binding.
Do you understand the hazards your
portfolio is truly exposed to? For
example, knowing if properties are in a flood, surge, fire or earthquake zone
can support a detailed plan for prospects your business can reach. 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.
Hazard information also allows you to
better educate your customers. Most
customers do not know what hazards their property, personal or commercial, is
exposed to. A neatly formatted on-line
report provided by your company using hazard data can help your customers
better mitigate for risk. As an example:
This address in New Smyrna Beach, FL.
Flood Risk
Covered
by FEMA digital maps. Minimal Risk of Flooding B
Fire Protection Class
Unprotected D
Wildfire Risk
Very
High
F
Drought Risk
Abnormally
Dry – Increases the risk of wildfire at this location C
Earthquake Damage Risk
No
Damage A
Hurricane Damage
High
Property Damage D
Superfund Site Risk
>
2,500 Feet from Known Superfund Site A
Brownfield Site Risk
>
500 Feet from Known Brownfield Site A
Florida Sinkhole Risk
Limited
Sinkhole Risk B
Straight Line Wind Risk
Very
High D
2″ Hail Risk
Very
High D
Tornado Risk
High C
Lightning Risk
Very
High D
Special Wind Regions
NOAA
Hurricane Prone Wind Region: Risk varies with location C
Florida Wind Born Debris Zone
130
MPH Wind Speed Zone F
Thunderstorms
Very
High D
In looking at this property an insurer can
instantly tell that there will be insurability issues. If this property were already a part of your
book of business there are any number of steps you would want to encourage this
policyholder to take. Unprotected for
fire – fire extinguishers. High risk of
wildfire – mitigation steps. Wind borne
debris – shutters. Impacts of convective
storms and hurricanes – roof ties, mitigation information, lightning rods. On the plus side there’s no storm surge risk
and minimal risk from flood. Knowing that
it’s unlikely that there will be a water claim.
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. Based on 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. 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.