New Cartographic Basis for Risk Assessment in Latin America

By Christopher Guider

Risks from natural and man-made disasters pose significant threats to economic stability and business planning throughout the world. Central and South American countries are especially prone to risks from hurricanes, earthquakes and floods. In addition to the tragic deaths these events cause, they also wreak substantial damage to property: Hurricane Katrina carried a price tag in excess of $100 billion, while the Chilean earthquake of 2010 caused between $4 and $7 billion in damages according to estimates by Swiss Re.

Sophisticated GIS solutions are required to assess natural disaster-related risks in the insurance and reinsurance industries. However, digital maps are frequently the weakest component of GIS solutions, compromising risk evaluations using outdated postcode and administrative units, which may be lacking in detail or accuracy and may have an inconsistent level of quality across layers and coverage areas. Recently released maps of Central and South America attempt to address this need by giving companies a precise, reliable cartographic basis for analyzing and planning their operations in this dynamic region. The vector-based maps have been specifically revised according to the needs of the insurance and reinsurance industries.

The maps offer detailed coverage from Mexico to Tierra del Fuego, with up-to-date rendering of the latest administrative and postcode boundaries. The highlight of the map edition is its enhanced coverage of postcode boundaries, on the basis of which data can be more accurately associated with the maps. Other features include increased detail in the rendering of coastlines, cities and topographic elements.

Precise coastlines and postcode boundaries essential for risk assessment
Accurate risk assessment requires digital maps that feature highly detailed, accurate coastlines. This is particularly true in assessing the risk of damage from hurricanes and floods.

Hurricanes Paloma and Gustav, 2008. (Click for larger view.)

"The highly detailed coastlines are a distinguishing feature of our maps and absolutely indispensable for evaluating risk in the insurance and reinsurance industry," says Klaus Dittmann, head of cartography at GfK GeoMarketing. "Many insured objects are located near coastlines and are therefore at increased risk from natural disasters such as storms and floods. The precise localization of insured objects is therefore a necessity for the survival of insurance companies."

Coastlines, while important, are just one of several factors in successful risk management. Postal and administrative boundaries are of equal importance and subject to constant revision. Maps depicting outdated boundaries result in numerous errors, and inconsistencies result when companies attempt to import their data.

These new maps offer coverage of the two-digit postcode boundaries for many Latin American countries, and in some cases, the five-digit boundaries as well. "Special postcode maps provide the basis for geocoding locations relevant to insurers, including residential structures, hotels, manufacturing plants and refineries," explains Dittmann.   

The updated postcode boundaries and increased detail of the coastlines make the maps suitable not just for the reinsurance industry, but also for any company that requires a detailed cartographic basis for managing its operations in Central and South America.

For example, administrative boundaries for Mexico have been comprehensively updated and reflect the latest status of 2,456 municipalities and 32 states. The maps now also feature approximately 3,500 cities and municipalities, organized into five population size categories with coverage down to a size bracket of under 10,000 inhabitants.

Maps for other Central American countries have also been updated and expanded, including Belize, Bermuda, El Salvador, Guatemala, Honduras, Nicaragua and Panama, as well as all Caribbean islands and states. The digitization of the cities in these countries has also been refined. For example, the maps of Cuba feature coverage of around 2,300 cities organized into five size categories. In some urban locations, the level of detail corresponds to a conventional map scale of 1:25,000.

The quality and comparability of the cartographic basis allow users to carry out meaningful comparisons between multiple locations. The maps thus support a broad range of applications, from business uses such as geomarketing and natural catastrophe planning by NGOs to detailed risk assessments by reinsurance companies.

Maps form backbone of GIS analysis and planning
High-quality, up-to-date maps are the crucial link between a company’s data and GIS software. Industries for which accuracy is essential require ever more detailed maps so that data can be geocoded at the local level.

This is particularly true of the insurance and reinsurance branch. Risk can vary significantly from locality to locality, so companies in this sector need an ultra-precise cartographic basis that can associate actual and modeled risks with the objects to be insured.

"Central and South America are very important regions for insurers and reinsurers, and a precise cartographic basis is essential for their analyses of natural catastrophe-related risks," says Dittmann. "Our recent update of Central and South America is the basis for a more textured portrait of relative risk that supports analyses and modeling on a significantly larger scale."

Insurance and reinsurance companies are increasingly turning to map suppliers that offer detailed, comprehensive coverage. More precisely digitized maps give these companies the confidence to set more accurate premiums for areas at elevated risk from natural disasters, such as the Latin American countries.

Published Monday, October 25th, 2010

Written by Christopher Guider

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