Advanced Placement: Geocoding Technology for Insurance
Introduction
Geocoding is crucial for insurance carriers as it forms the basis for understanding location-based risks and underpins various processes like risk assessment, program development, and underwriting. Traditional geocoding methods — parcel-level, street-level, and ZIP-9 geocodes — are commonly used and typically work well.
Occasionally, these forms of geocoding have limitations that can lead to inaccurate risk assessments, specifically use cases like rural addresses, non-postal addresses, new builds, and large properties. These minor problems can add up to big losses over time.
Modern Geocoding Solutions
Rooftop geocoding. Rooftop geocoding overcomes many of the limitations of parcel and ZIP-9 accuracy levels by providing precise, up-to-date location data at the rooftop level. Unlike traditional methods, rooftop geocodes pinpoint the exact location of a building or a specific unit within a complex, allowing for more accurate risk assessment. This precision is especially crucial for insurance carriers, as it improves the accuracy of catastrophe (CAT) models and ensures that policy coverage aligns closely with the actual risk profile of the insured property.
Persistent Unique Identifiers (PUIDs). PUIDs complement rooftop geocoding by offering a stable reference point for address data across different systems and datasets. PUIDs offer a unique key tied to a specific location that remains consistent over time despite changes like zip code modifications, street renaming, or property alterations. By linking all relevant data to a PUID rather than an address, insurers can maintain an accurate, holistic view of a property’s risk profile, improving underwriting accuracy and compliance.
When you combine the power of a PUID with rooftop geocoding, your risk assessments become far more accurate, even in outlier use cases. A persistent unique identifier makes a better connection for risk analysis than an address. Geocodes give you a more exact location than the address, while the PUID gives you better data accuracy when connecting your data.
Address aliases can make data messy
Did you know that addresses regularly change in part or entirely while still referencing the same location? In some cases, it’s just a simple street name that changes. In others, it’s part of the zip code, and some even have the entire city change, or worse, two cities claim the address. This makes the entirety of the actuarial and underwriting process disastrous. If you’re unsure if the location you’ve identified is the correct one, how can you even begin to conduct risk analysis or build risk models? You can’t, and that’s where a PUID comes in handy. With continuous changes in addresses, insurers need a reliable method to connect their risk data. Using a PUID as the reference point for an address rather than the current address enables you to blend risk modeler accurately and assign weather and other risk data to your insureds.
Save time with risk analysis
Risk analysis is only as accurate as the address connected to the risk data. The problem is that there are always at least three addresses involved in risk analysis for every property: the address the insured enters, the address to which the risk data is connected, and the actual address of the property to be insured. Sometimes, these addresses align perfectly, and sometimes, they don’t. So how do you get maximum accuracy?
What you may not know is that many catastrophe and risk modelers are delivering a PUID along with their risk data. If you’re using a geocoding or property data provider who also utilizes PUIDs, this makes connecting all your data simple, especially if you’re all using the same provider for address location intelligence. Instead of mapping data to the address, you map the data to the PUID to ensure everything is consistent.
Streamline efficiency from quote to claim
As the saying goes, garbage in equals garbage out. The same is true for underwriting and claims. Bad data coming in for underwriting can equal a disastrous claims process. With inaccurate property and address location intelligence data, claims agents and adjusters may not get the full picture of the property’s condition before a loss occurs. In some situations, they may not even have the correct property identified.
The best way to avoid garbage in your address data is to stop its entry at every point. If you have apps and form submissions online, you should use an address autocomplete API to ensure you’re only getting verified and standardized addresses entering your system. And if you’ve got agents entering data on the claims side, you need the same address autocomplete suggesting addresses for them.
If you are entering addresses into your site, you’ll probably also have an extensive database. It’s safe to say this existing address data varies in terms of accuracy. This is where processing your database with rooftop-accurate geocoding paired with a PUID can save the day. In many cases, 15% to 20% of addresses in the database have errors. By cleaning them with geocoding and connecting other data sources to them with the PUID, you can identify problems and streamline your processes.
Real-World Applications of PUIDs for Insurance
Here are some examples of the benefits that geocoding and PUIDs can provide for today’s insurers:
Enhanced risk assessment. Using PUIDs in combination with rooftop geocoding allows insurers to accurately track and assess complex risk profiles for any given address. For example, data about wildfire risk, proximity to flood zones, or crime rates can be consistently tied to a PUID, providing a more accurate and dynamic risk assessment model. This integration ensures that all variations of an address — whether primary or secondary — maintain consistent scoring, even when location data evolves.
Maximizing ROI. By improving data accuracy and consistency, PUIDs help insurers reduce loss ratios and minimize the costs associated with incorrect risk assessments. This enhances profitability and streamlines underwriting processes, allowing agents to handle applications more efficiently and with greater confidence in the data’s accuracy.
Regulatory compliance and fraud prevention. Consistent and accurate geocoding data is crucial for underwriting compliance. PUIDs and rooftop geocodes help insurers ensure they don’t unintentionally violate underwriting rules or state laws. Moreover, maintaining accurate address data reduces the likelihood of fraudulent claims, promoting fair payouts, and reducing liability.
Improving customer experience and loyalty. Accurate geocoding data, supported by PUIDs, enables insurers to process claims more swiftly and precisely, enhancing customer satisfaction. Customers who are adequately insured based on accurate risk assessments are less likely to face unexpected costs or coverage gaps, fostering trust and loyalty.
How to Empower Insurance Providers
Evaluate current geocoding practices. Assess the existing geocoding methods to identify areas needing improvement, focusing on accuracy and data consistency.
Explore rooftop-level geocoding solutions. Ensure that your organization’s geocoding solutions are truly rooftop-level accurate.
Implement PUIDs. Integrate PUIDs into geocoding practices to maintain consistent, accurate location data over time and accommodate dynamic changes in address information.
Partner with address intelligence leaders. Collaborate with address validation and geocoding experts to ensure access to the most accurate and up-to-date data, leveraging advanced tools and technologies.
The Final Word
Accurate geocoding and the use of PUIDs are essential for property and casualty insurance carriers to navigate the complexities of location-based risk assessment. By moving beyond traditional geocoding methods and using PUIDs while adopting rooftop-level geocoding, insurers can significantly improve their risk modeling accuracy, regulatory compliance, and overall customer experience, ultimately enhancing their operational efficiency and profitability.
