How to Overcome Insurance Challenges with Accurate Geocoding

Yan Trudeau 

Partner Development Manager

November 19, 2018

How to Overcome Insurance Challenges with Accurate Geocoding

Insurance is a promise to policyholders. It says, when something goes wrong, we’ll be there to help. But you can’t make that promise to everyone and stay profitable. That’s where location makes a difference.

Traditional insurance companies have recently been disrupted by the insurtech trend. Its new business model, annual giveback, great user experience and modern technology stack are its key differentiators.

But let’s face it, regardless of your company’s size or culture, it’s all about offering a customer-centric experience and engagement. You also face the same challenge: Pricing efficiency and risk management, but the difference being, are you better at it than your competitors?

If you answer by “We geocode our customers’ policies, we know their locations and the risk they are exposed to,” it’s a great start! The address and the location of your existing and future customers are key components in risk qualification. Geocoding in insurance is no longer an option but a necessity.

Data Accuracy is Critical

Not all insurance companies geocode their policies. However, all of them will ask the customer’s address. So why would an insurance company avoid geocoding? Why would another base their decisions on inaccurate data?

Data accuracy is critical. In geocoding, this topic is divided in two main concepts: address recognition and geographic precision.

Address recognition infographic

Address Recognition

At Korem, we believe geocoding is a commodity but getting a high-matching address rate is an art. The value of geocoding mostly comes from the address recognition rate you can achieve. False positives, poor geo confidence level and unrecognized addresses are usual outcomes of weaker reference databases. When facing this situation, insurers manage these address exceptions manually while they would get significant return by relying on a fully automated process. Geocoding databases also vary in address completeness and precision. Nevertheless, insurers keep licensing numerous geocoding datasets, applying their own logic to choose the perceived best address matching and geocoding results.
Geographic precision infographic

Geographic Precision

Address Point is the most relevant geocoding precision level in insurance, usually pin pointing the rooftop of a property or the centroid of the parcels. An Address Point approach reduces the chance of false positives. The remaining geocodes are typically handled by a “fallback” process that will find the next best level of geocode, like a street interpolation. A simple example is geocoding in rural area, where larger areas and longer street segments can lead to a small shift when geocoding, having a property in an incorrect hazard zone, creating inaccurate premium, or higher customer churns. In short, the quality of the coordinate produced by the geocoder is also vital for making good business decisions.

Resolving Data Accuracy with Master Location

Master Location Data (MLD) is an address point geocoding dataset developed by geocoding leader Precisely (formerly Pitney Bowes). MLD provides a better match rate because of the following factors:

  • MLD delivers more address points than any other product on the market (close to 180M);
  • MLD offers the most complete geographic coverage than any other product on the market

Korem has recently conducted challenging benchmark of 2MM records for a customer handling poor quality address data and who currently runs simultaneously three geocoding datasets in parallel.

  • They achieved a match rate of 69.31%, with 15.84% fallback to street geocoding giving a total match rate of 85.15%;
  • Korem performed the same benchmark using MLD and found 84.44% of the addresses to be known in MLD with only 9.6% fallback to street geocoding, making a total match rate of 94.4%.

In summary, MLD achieved a 15% uplift in matches to known addresses.

MLD Geographic Precision

MLD also delivers better geographic accuracy for the following reasons:

  • MLD chooses the ‘golden point’ or most accurate coordinate for every address from up to 9 possible coordinates available;
  • If this coordinate is one that is ‘interpolated’ or calculated, the calculation uses some advanced algorithms not generally available to customers, and more advanced than any other on the market.

To illustrate the impact of MLD’s accuracy, the entire MLD source file (180M addresses) was geocoded using the Street Interpolation technique. Then, the distance between the interpolated location and the MLD location was measured.

The results were that 57.90% of the interpolated geocodes were more than 500 feet away from the MLD locations!

Geoenrichment Enhances the Value of your Addresses

Once you get a higher confidence level by having your policies at the right location, it’s time to geoenrich your addresses by adding a new layer of location intelligence to your processes. Geoenrichment means augmenting the value of your addresses with additional information from a geo source. It enables you to answer questions like “How far do you live from a fire station?” or “How many rooms does your property has?” in a fast and reliable way to meet your customer’s expectations. Indeed, as prefilling and quick quote is becoming a standard marketing tool, not doing so can impact your business as customers will lose confidence, opportunities will be missed, and revenue will go down. So how can you nail down your policies and get ahead of your competitors?
Geoenrichement infographic

Getting faster answers with Master Location Data & the PB Key

Precisely created GeoEnrichment files, a game changer for your quick quote process! You can geoenrich your addresses with relevant proximity information to wildfire, fire protection, flood, distance to coast, earthquakes and crime, as well as property attributes and demographics, without processing any spatial analysis on your end.

Geoenrichment and MLD addresses are linked using the pbKey. This key is unique and persistent and simplifies insurers addresses handling in many ways:

  • Faster response in Geoenrichment process;
  • Simplify address management across multiple systems;
  • Maintain history on address merging, splitting and address changing

If You Made it This Far, Here is the Best Part!

Writing an article on how accurate geocoding data can minimize risk in insurance is one thing but executing it is another. At Korem, we help insurance companies operationalize address recognition, geocode and geoenrich solutions to solve real business problems.

Earlier we asked what makes you better than your competitors? If you return the question to us, we answer by: our team of qualified geospatial experts.

If your business is ready to deep dive into geocoding, we are just a call away. Don’t forget to have your data ready!

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