Integrated Enterprise Geo-Spatial Technology - Insurance Risk Examples

All geospatial applications, including geocoding, are rapidly becoming embedded within the entire enterprise. With this convergence, spatial tools are increasingly common in IT infrastructures, especially in corporate databases. Major companies such as Oracle, IBM, and Microsoft have developed spatial capabilities.

Enterprise geospatial solutions require integrated software and data applications that can be easily deployed via the Web. Enterprise-wide, geospatial solutions are location intelligence derived from the precise position of a point in relation to other relevant spatial entities such as insurance risk (e.g., brushfire, storm surge, earthquake fault), tax jurisdictions, customers, competitors, suppliers, or sales potential).

As location intelligence is integrated into more enterprise business solutions, the adoption of many location-specific applications will be limited without improved positional accuracy. Many solutions promise “roof-top geocoding” but the positional accuracy is interpolated along the street face. An enterprise location solution requires all of the following for complete geospatial intelligence:

1. Point-precise geocoding accuracy;
2. Supporting GIS databases that are correct in terms of both spatial position and data attributes; and
3. The technology for spatial processing and business rules.

Geocoding forms the basis for much of the revenue promise of the entire location intelligence industry. It is the essential enterprise-wide technology for a number of industry verticals including insurance, telecommunications, cable, utilities, retailing, and consumer-oriented LBS.

This article is focused on enterprise-embedded risk applications for insurance companies. In subsequent installments, we will focus on specific risks such as brushfire, wildland/urban interface, and storm surge, as well as tax, retailing, consumer LBS, and other applied geocoding-database solutions.

The massive wind and storm surge damage from Hurricanes Katrina and Rita and recent brushfires in Texas and Oklahoma highlight the environmental risks faced by insurance companies. The risk for any given address is a function of its location relative to potential environmental hazards. An address in the middle of a concrete and asphalt city faces almost no brushfire risk while those at the edge are more vulnerable. Houses built near hurricane prone coasts face water and wind risk as a function of elevation and distance to the coast.

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Insurance companies have to model risk for underwriting analysis. Insurance companies are increasingly turning to enterprise geo-spatial solutions seamlessly embedded within the organization. The solution includes the tools to:

1. Provide high-level spatial accuracy for each individual address geocode;
2. Access spatially precise GIS layers for specific risks such as brushfire or coastline;
3. Assign a risk score from an actuarial model based on past losses and damage footprints; and
4. Implement business rules to apply the correct premium price based on the rating territories derived from risk analysis.

Spatial processing, including standard GIS operations, geocoding, and spatial databases, is rapidly merging into the mainstream enterprise IT structure. Location intelligence is moving away from specific and “special” desktop applications operated and controlled by a few gurus off in the corner. Location intelligence must be integrated and distributed throughout the total business organization to provide all users with the data and analysis for sound business decisions.

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