Insurance Risk Mitigation Insurance Risk Mitigation Using Parcel DataUsing Parcel Data

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Howard Botts, PhDHoward Botts, PhDProxix Solutions, IncProxix Solutions, Inc

www.proxix.comwww.proxix.com

Parcel Data and Location Parcel Data and Location IntelligenceIntelligence

“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 144.3 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 DataWhat is Parcel Data??

Parcel Point vs. Parcel Parcel Point vs. Parcel BoundariesBoundaries

For companies collecting parcel data on a national level there are 2 competing methodologies for maintaining the files:

1. Parcel points or2. Parcel boundaries

Geocoding – Street Address Range Geocoding – Street Address Range Interpolation vs. Parcel GeocodesInterpolation vs. Parcel Geocodes

Which Rooftop Do We Which Rooftop Do We Insure?Insure?

Advantages of Parcel Boundary Advantages of Parcel Boundary CollectionCollection

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 Coastal Risk Data With Parcel BoundariesBoundaries

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

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

Is the Property In/Out of the Windpool Is the Property In/Out of the Windpool Boundary ?Boundary ?

Santa Barbara Parcels and Brushfire RiskSanta Barbara Parcels and Brushfire Risk

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

126 Feet

SummarySummary

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.