Unlocking Insights: The Power of Geocoding in Insurance Underwriting

Geocoding — what is it? Insurers use this location intelligence technology to ask “where is it” to gather, verify, and validate address information for more accurate underwriting. In our latest podcast, Berk Charlton, Chief Product Officer for Smarty, joins host Andy Labrot, Sapiens’ VP of Product Management, to discuss why correct locational data is so critical to improve risk analysis and uncover growth opportunities in today’s P&C insurance industry.

Andy Labrot|Berk Charlton

Andy Labrot: Hello! Welcome to the Sapiens Insurance 360 podcast. I’m your host, Andy Labrot, VP of Product Management at Sapiens, and I’m so glad that you’re here and out there listening; this is where we discuss the latest news, trends, and issues from across the insurance solutions and technology spectrum.

Today’s topic is a great one. It’s geocoding. What is it and why is it important? Today’s geocoding technology is so much more than just location intelligence; it allows underwriters to collect valuable data for underwriting processes and uncover opportunities for growth, as well as identifying risk. And here to expand on this valuable capability is Berk Charlton, Chief Product Officer for Smarty.  Smarty, a valued Sapiens partner, is an expert location data intelligence firm whose technology verifies, validates, enriches, standardizes, and auto-completes addresses in 240+ countries and territories around the world.

Berk, welcome to the program!

Berk Charlton: Thanks Andy! I’m happy to be here. And Smarty is just thrilled to be part of the Sapiens’ ecosystem and a partner.

Andy Labrot: Well, it’s great to have you here, so let’s begin. So what should insurers be looking for in a location intelligence solution?

Berk Charlton: Well, thanks, Andy. The location tells us.. [it’s] a really, really big, it’s really very large, definition. Our specialty in location intelligence is, is anything that begins or ends with an address, we want to be able to locate it properly and help our customers make decisions about it. So one of the first things that everyone should be looking for is a high level of accuracy. In our case. rooftop accuracy is the standard. Most addresses in the U.S. and many throughout the world will be accurate to the building footprint or the building rooftop. Being easy to integrate is also critical. I’ll get into that a little bit more. And then reliability including, since we’re 100% cloud native, having a high level of uptime, in our case, five nines. And in fact, we’ve actually had never any recorded downtime in over 11 years. And then having consistent results over time with the answers that our customers are expecting, and also great support. When if you call us, we will answer the phone, we will answer chats, we answer emails all within usually within minutes. But our SLA is 24 hours. Most insurers, also use multiple data providers. That’s, that’s a common thing that they would need to do. They’ll, they’ll use some risk data from one company, other risk data from another. But the thing that ties it all together really is the location. It’s a location not accurate that everything else becomes suspect. So and then having a way to integrate all this data together is really important. And that’s why our, our ease of use APIs are pretty critical to this process.

Andy Labrot: We at Sapiens can certainly attest to the ease of integration with Smarty, as it’s prepackaged with our CoreSuite for P&C solution. But why is accurate and scalable geocoding important in underwriting processes?

Berk Charlton: That’s a great question. I mean, as you said before, accuracy is the really the foundation of risk analysis as it applies to P&C insurance. And without an accurate geocode, the modeling results, underwriting and pricing, even things as basic as territories assignment, it all becomes suspect. The Harvard Business Review, for example, did a, a research article on accurate geocoding and they determined that hyper-accurate geocoding, which they determined as being accurate to the rooftop and unique ID assigned to every location and address, could, across the industry, save tens of billions of dollars or to add tens of billions of dollars in profitability. And then the common ID allows such a smart key that we have, allows you to link risk data across providers, to this very common ID.

Andy Labrot: Wow. That’s very powerful. So moving on, how can insurers and risk modelers get the most out of geocoding solutions?

Berk Charlton: To get the most out of it, first of all, I think that, that there needs to be a recognition that accuracy is important and that speed and integration are important. The one way that some of our customers have been able to do this is they might have a cascading process by which they say, well, if this one geocoding solution, gets the answer, we’ll take it. And then they’ll move on to, to maybe one or even two other providers. We don’t have enough hubris that we say, we’re going to get every address perfectly geocoded every time, but what we will tell you is that, but we are accurate 97% of the time, we’ll get to a rooftop or a parcel level. But what we’ll tell you is, we say we got an accurate address, we did get an accurate address. So our customers should be looking for, to understand the harm that false positives can give you. And I’ll use like, there’s a couple of very popular, mapping platforms, for example, on the internet that will, that people, very popularly use for routing and things like that. Well, the false positives, though, are quite legendary there. And a lot of insurers have realized that they can’t, they can’t use, consistently at high volumes, something like Google Maps because it’s not going to give you, it’s going to give you false positives and it won’t tell you it gave you false positive. So insurers need to, to combine and combine geocoding with address validation. And that will definitely help reduce false positives and then have the confidence to move forward with that. And then also the ability to be able to link that data to a common unique identifier, such as master, that we have in our master address list, but it’s also included in all of our geocoding products, too. We assign a unique ID to every location. Then that can be used to, to look at… do I have multiple addresses that are all tied to the same unique ID? That means you’ll have, you’ll be able to make those determinations quite easily.

Andy Labrot: Fantastic! Well, we one of the things that we leverage from Smarty is the idea of the FIPS code, which helps us identify the counties which then allows our insurers to manage their capacity. But what are some of the other products that Smarty offers that are complimentary to geocoding technology and servicing?

Berk Charlton: Well, that’s a good question and thanks for asking that. We, I did already mention that we have our address validation, for the U.S. and for 240 countries around the world. That this will… the first critical element in terms of getting a good geocode is getting the address right. If you don’t get the address right, then the geocode becomes very suspect. And so a lot of our customers will use or use our, our address verification products, independent of geocoding, just so that they can, can help with, package delivery or with, with mail ability or just understanding their customer base a little better for fraud analysis and things like that. Some of the other products that we have with, would include our auto complete product. Whereas you start typing an address, [and] it will pre-fill it with the information about that particular address. And that is also a global product. And our property data for the U.S. which has 350 attributes of data for every single property and will have things like structure attributes and geographic attributes about that property and also even elevation. Our master address list is an important product that’s actually foundational to our other products. But that includes, over 210 million addresses. Also, I should have mentioned earlier that nonpostal addresses are really a critical thing for insurers to know that even if the USPS doesn’t recognize an address as being something that mail is delivered to, a non-postal address is still a valid address that many insurers need to know about. Our master address list product includes all of the non-postal addresses and all of the postal delivery addresses across the country. All, almost all of them accurate to within a building rooftop or a partial central level of accuracy. One other thing is, is we try to make our products very easy to use, we have plug-ins for Excel, Google Sheets, SQL server, QUIS, and, and more products. So we’re expanding that. We’re trying to make our products accessible in addition to being, available in a, in a platform like Sapiens. We realized some our customers may want to use the data in in other tools as well. And we try to make that very, very, available.

Andy Labrot: Wow. That’s a very, very powerful solution. So how does Smarty differentiate itself from other geocoding and location intelligence providers?

Berk Charlton: Well, we include a lot of metadata just in our standard results. So for example, a normal geocoding result will include over 47 attributes about that address, including things like county FIPS code, and, and if it’s a residential or commercial address, we include things like congressional districts and place codes and various other pieces of information that many insurers may, may find helpful. Our speed is something that is really important. We have customers that have, a contractual requirement. They need over 75,000 records to be geo-coded per second, which if you do the math on that, there’s hundreds of millions of records an hour. This is not unusual for our customers to be able to get these kinds of speeds. We’re cloud-native, so it’s not like we’re retrofitting, an on-premise solution to the cloud. We’re cloud-native, so that’s, that really helps us to be able to, to live and support and our customers completely in the cloud. And then Smarty Key is an important differentiator. It’s a unique identification code that applies to every single address in the whole country. And that’s included with all of our geocoding products.

Andy Labrot: Wow. That’s terrific. So thanks for all this great background information as well as your insights Berk, and for addressing and advising our listeners on how geocoding can identify property specific risks, improve risk assessment, and create more accurate pricing models to enhance operational efficiency. To our listeners, as always, thank you so much for spending your time with us today. We love hearing from you, so if you have any comments or would like to follow us on social media, please reach out to us on our channels. And obviously, don’t forget to subscribe to the podcast. We’ve got more coming, so stay tuned to our Sapiens Insurance 360 podcast.