Solving the Geocoding Puzzle | Digital insurance

Read part one here.

A refresher

Accurate geocoding is vital to property and casualty insurance carriers as it underpins risk assessment, underwriting and product development. Traditional geocoding methods such as parcel-level, street-level, and ZIP9 are often insufficient due to inaccuracy and outdated data, especially for rural areas, new construction, and large properties. Rooftop geocoding, however, provides accurate location data, mitigating these issues and providing better risk assessments. Coupling rooftop geocodes with Persistent Unique Identifiers (PUIDs) ensures consistent and up-to-date address information, which is essential for accurate risk modeling and policy coverage. This transition to rooftop geocoding and PUIDs is a smart move for insurers looking for reliable and accurate geospatial data.

Real Applications of PUIDs in Insurance

Industry experts support the sentiment that accurate rooftop geocoding data, combined with the power of PUIDs to track changes, cannot be overstated. Relying only on parcel-centric and address-level geocodes in policy formulation can precipitate inaccurate risk assessments and underwriting compliance challenges. Although parcel-centric geocodes are rooftop accurate on smaller lot sizes, relying on them for non-postal addresses or areas with a larger lot size or multiple components in a building footprint can escalate payments to the full limit of losses, may diminish revenue streams or even involve your organization in regulatory scrutiny.

A unique persistent ID will allow you to use best practices such as pre-adding data while connecting multiple datasets to a location ID, eliminating the large overhead of spatial calculations with each address. The use of PUIDs in combination with geocoding data supported by address verification has delivered tangible results to real people in the insurance world by:

Pre-attachment of data

Insurance companies are constantly looking for ways to extract value from analyzing customer address data and find ways to adjust risk profiles. A consistent PUID linking the historical address as you run and re-run these datasets will ensure the highest level of accuracy. This further allows insurance and reinsurance carriers to set a more accurate price for the risk they are taking on. The full domain and exact information is initially available to them with the help of PUIDs and geocoding technology.

Complex risk profiles for a given address can be stored in a single PUID for fast modeling. Information such as distance to the coast, proximity to fire risk, likelihood of sinkholes, potential flood areas, crime rates, etc., can be stored in a single PUID. Insurers will know that even multiple alias addresses that share a PUID will have consistent scores and that these PUIDs will remain constant over time.

Maximizing return on investment and smiles

Carrier loss rates will improve as, with PUIDs and geocoding, underwriting risks will be more fully understood. Similarly, fewer programs will be canceled due to ineffective cost forecasting from bad address data.

Your return on investment will increase and the accuracy achieved efficiently will save underwriting agents time and increase the accuracy of the application process. Even though robust programs using PUIDs and geocoding are already in use, some will not lock down an already comprehensive platform. With the right company, automatic updates run continuously in the background to ensure your data is always the most accurate data available.

Keeping address data consistent

Deduplication is imperative, especially in this industry. Even in the wake of a total catastrophe, such as a house-level earthquake or tsunami destruction, geocoding pins and PUIDs can ensure that the correct area is found for reconstruction and reinsurance.

Your organizations can be proud to know that they do not insure risks that would violate underwriting rules and, more importantly, State Department of Insurance laws. Consistent data helps your organization be much less likely to be guilty of fraud, which promotes fair payments for both the customer and the organization. Regulatory compliance is easier to achieve using these tools.

Enhancing the customer experience

Claims will be processed more accurately and efficiently by identifying the affected property at the outset. Accurately insured customers will create lasting relationships and return business in the future because they will never be left in an uncomfortable or harmful situation due to being underinsured or overinsured. Word of mouth from a satisfied customer is one of the most powerful forms of free advertising.

Takeaway – Four steps for insurance providers

1. Assess Current Geocoding Practices: Before diving in, recognize what your organization is doing well and see where improvements could be made. You may already have systems in place that help with geocoding practices. This is a great starting point, but to enhance your experience, you also need to look at your tech stack. A reliable, fast and accurate one should be at the top of the list so you don’t have to pay others. The goal is to understand what processes are already in place and then modify them for greater accuracy and efficiency.

2. Explore Rooftop Accurate Geocoding Solutions: Really evaluate the level of accuracy of your geocoding solutions. If they claim to be roof-level accurate, they should actually be roof-level accurate. Don’t give companies a pass for giving you less than accurate data.

3. Implement PUIDs: As we’ve discussed, it’s just not good enough to only use geocoding when you’re in insurance. City boundaries change, streets are renamed, homes are divided into mother-in-law apartments, and many other changes occur daily. A PUID ensures that your organization keeps up with changes and accurately assesses risk based on historical history.

4. Collaborate with information industry leaders: While you could try to do this alone, you shouldn’t. In many cases, finding an address information expert to understand your pain points and address them all at once can be significantly cheaper and more efficient.

Understanding the connection between PUIDs, geocoding and address verification is crucial for property and casualty insurance carriers. Location-based risk assessment and underwriting processes rely on accurate information. While traditional geocoding methods such as parcel centroids and street-level data have worked well in many cases, they are often insufficient in others and fail to keep up with rapidly changing property configurations.
Instead, PUIDs provide a consistent data connection between various data sets, ensuring accurate location data persistence during city expansions, address changes, and other changes. This combination not only improves risk modeling accuracy and compliance, but also maximizes return on investment by minimizing claims payouts, improving customer service and ensuring regulatory compliance. For insurance providers, integrating roof-level geocoding with PUID technology is critical to navigating complex risk landscapes efficiently and effectively.