How Insurance Companies see a Good Payback from Location Intelligence - Alex MacKay, CEO

In recent posts we have heard from a futurist, an editor and an analyst about why Location Intelligence is important to the insurance industry. This week I decided to take the question to the actual "street" and talk with an insurance company. Speaking with Peter Silk, SVP at Lombard Insurance in Toronto, Canada we chatted about this question.....how important is location in insurance? Peter's experience says it's all about more and more data coming into use for decisions. He figures the importance of location information has grown at least threefold in the past couple of years. And while Peter agrees a main driving factor is risk mitigation, he also sees a number of business processes in insurance growing due to the need for more precise location information. He talked about these five in particular:

• Risk management around knowing specific property detail vs offering insurance in ways such as blanket policies where the specific risk on individual properties is not detailed
• Reporting to the various regulating bodies who are inquiring at a more individual property level (ex. Asking questions such as, are you drilling down to the location property level? OR do you have property policy specific exposure vs. aggregate?)
• CAT management and knowing where your risk locations exist. It simply means knowing more, such as your estimated probable maximum loss, your TIV, and being able to react promptly when events such as high wind storms cause damage
• Underwriters have many needs for this improved detail and right at the top of the list is to ensure that there is a managed balance level of exposure in any one geographic area
• And, having risk location information and location risk profiles for the re-insurance market makes the pricing of that business a whole lot better

These are all solid examples of just why insurance companies are seeing a good payback from investing in the capabilities of Location Intelligence.

I then asked Peter what trends he saw growing in importance in the upcoming years. He basically sees the need to get more information at the specific property level as the core need and that the data will just keep getting added. He says this is why getting the address correct is so critical. If you have the address nailed, then you can begin to overlay more and more data/knowledge on the exact location. He made a point of saying that if you can't be confident that two data sources are speaking to the same address then this greatly affects the ability to make an informed decision (knowing a property is mid street vs a corner property is a simple example with different decisions). The address trust is critical. With accurate confidence in the address, Peter then sees that insurance want the latitude and longitude to be precise and rooftop is what is ultimately needed. With rooftop accuracy he foresees that a lot of other maps and imagery can be overlaid for the decision needs. Next comes many other data sources such as loss information, credit information, and statistical history as examples.

As Peter said right in the beginning of our chat, it's all about more and more data. Location Intelligence is simply providing valuable information to help insurance companies make better business decisions.