Insurance Risk Mitigation Using Parcel Data by Howard Botts, PhD Proxix Solutions, Inc

Parcel Data and Location Intelligence  “Location Intelligence” in the Insurance Industry has evolved to the most “granular” level possible with the availability of digital property parcel boundaries.  Today companies can evaluate a variety of hazard risks, such as coastal surge and wildfire, using parcel data and parcel level geocoders.  The use of parcel data allows companies to understand hazard risk and risk concentration at the “micro-level” resulting in:  Evaluation of risk at the insured boundary level;  Avoiding adverse risk selection;  Micro-level targeting; and  Improved loss ratios and increased productivity.

 Parcel boundary data represents the legal extents of each taxable U.S. property address.  There are an estimated million privately owned parcels in the U.S.  About 68% of all conventional parcel maps have been converted to digital parcel data.  As digital parcel boundaries become available they are rapidly being incorporated into locational intelligence applications to enhance:  Geocoding accuracy;  Risk assessment;  Target marketing; and  Many other uses where “granular” accuracy is important. What is Parcel Data ?

Parcel Point vs. Parcel Boundaries  For companies collecting parcel data on a national level there are 2 competing methodologies for maintaining the files: 1. Parcel points or 2. Parcel boundaries

Geocoding – Street Address Range Interpolation vs. Parcel Geocodes

Which Rooftop Do We Insure?

Advantages of Parcel Boundary Collection  For the insurance industry the parcel boundaries reflect the exact outline of the insured property.  By using the parcel boundaries risk calculation can be automated with spatial processing to understand:  The percent of a property within a brushfire risk zone, a flood plain, or a coastal surge risk zone;  Proximity or distance of the property to risk zones;  The average elevation, slope, and aspect of the parcel; or  Other risk categories that would impact coverage and pricing.

Coastal Risk Data With Parcel Boundaries

Where is the Property Relative to Coastal Buffers or Surge Zones?

Parcels Within 2500 Feet Of The Coast But Not Located Within A Surge Risk Zone

Is the Property In/Out of the Windpool Boundary ?

Santa Barbara Parcels and Brushfire Risk

What is the Brushfire Risk Zone & How Close is the Parcel to a High or Very High Risk Zone? 126 Feet

Summary  Parcel data and parcel level geocoding, when combined with “highly granular” risk databases, present the “best” solution for insurance companies to:  Understand, evaluate and model risk at the household level;  More precisely micro-target opportunities within a market; and  Automate risk underwriting with a high level or accuracy and confidence.