Feature Story:
LOCATION Analyst: A GIS Like No Other
An interview with Bryon Kenne, LOCATION Analyst Product Manager and GIS expert
Insurers are looking for ways to spatially explore and analyze vast amounts of policy and claims data so they can make intelligent risk-management decisions — such as where they have too much exposure on their book and where opportunities exist to write more business. That’s where GIS comes in.
A geographic information system (GIS) integrates hardware, software, and data for capturing, managing, analyzing, and displaying all forms of geographically referenced information.
With a GIS, you can view geographic data in several ways:
 database view — a structured geographic database, sometimes referred to as a geodatabase, that describes the world in geographic terms
- map view — a set of intelligent maps that show geographic features and relationships on the earth's surface
- model view — a set of transformation tools that derive new geographic datasets by applying analytic functions to information from existing datasets.
With GIS technology, insurers can analyze their books of business for:
- underwriting
- ratemaking
- reinsurance
- corporate governance
- sales and marketing
- claims risk analysis and handling
- customer service
- catastrophe response
- hazard analysis and mapping
But, it takes more than a GIS to give insurers a complete system that accesses their policy and claims data, creates and maintains geodatabases with the best address standardization and geocoding practices, offers customized reports, and lets you create powerful maps. ISO developed LOCATION® Analyst to address many of those issues.
We sat down with Bryon to discuss GIS and how LOCATION Analyst can help insurers make better risk-management decisions.
What is a GIS?
A GIS merges databases with geographic data to create smart maps to help us understand, visualize, analyze, and assess data in new ways. Relationships among individual data points (or properties) might be hard to visualize when you’re looking at a spreadsheet of values. But by placing those elements on a map and using color and other attributes to create themes, data relationships become more obvious. For example, you can calculate your exposure for a specific area in a spreadsheet, but when you use a map to display the exposure concentration, you get a much better idea of your total exposure across several areas and can identify areas with similar attributes for market expansion.
You can map policies in a selected study area around an
earthquake fault and then observe their risk-concentration level
geographically.You can see large clusters of policies in areas
near and around the fault line. This information can help you determine if the company is
taking on too much risk in areas with a high likelihood of peril.
What is the real value of LOCATION Analyst to insurers?
The value of LOCATION Analyst is its ability to enable intelligent risk management decision-making, proactively identify and rapidly respond to policyholders in high-risk areas, mitigate potential major losses from peril, and facilitate expansion into favorable areas of business. The system also brings you value by helping you price the true risk associated with each individual property and maximize your underwriting by identifying underperforming areas in your book of business. LOCATION Analyst makes sophisticated geoanalytics available to companies of all sizes — in a system you can use for a smaller investment than if you developed a similar system on your own.
What types of detailed analyses and reports are available?
With LOCATION Analyst, the only limit to what you can do is your imagination. You can get the risk distribution of your policies and coverages and visually see your book of business mapped in study areas you select. You can determine market prospecting opportunities based on census demographics or any other geographic data of interest to you. You can even map your policies based on your risk tolerance and see their risk-concentration level geographically.
What is the smallest area you can analyze? What is the biggest?
Study areas — specific geographic or risk areas you can analyze and map — can be as small as a census block or as large as a county, state, or group of states. Once you’ve defined your study areas, you can create an unlimited number of reports to analyze your book of business.
Some customers may not have a background in using a GIS system. Can they still use LOCATION Analyst?
Absolutely. LOCATION Analyst software is easy to use, and with the built-in reports, customers can start producing analyses almost immediately. We have developed an extensive help system — which is key-word searchable — to assist customers with all aspects of the program. We’re also offering on-site training to our customers when they sign up for LOCATION Analyst. And, of course, our GIS team is only a phone call away.
What makes LOCATION Analyst unique?
LOCATION Analyst contains ISO proprietary data appended to your files. That includes Public Protection Classification (PPC™), territories, and, in the commercial lines version of LOCATION Analyst, SPI Plus® database information for about 3 million buildings in the United States. We supplement ISO proprietary information with data from nationally recognized sources like the U.S. Census Bureau and the U.S. Geological Survey.
What was the driving force behind the development of LOCATION Analyst?
LOCATION Analyst is the next logical step in the evolution of LOCATION. Many industries have embraced GIS analysis as computing platforms have become more powerful and the technology more user-friendly. You can easily manipulate and analyze vast datasets using GIS tools. To quote an old adage, “A picture is worth a thousand words.”
How can you use LOCATION Analyst in a real-time underwriting environment?
Real-time information, such as severe-weather and wildfire data, is available to customers to view their book of business on a map, analyze the potential loss during an event such as an earthquake or hurricane, alert policyholders, and deploy claims personnel.
You can see that many policies are close to the wildfire
perimeter.You can continue to monitor the active fire perimeter
to measure wildfire risk in your book of business, closely watch
properties that may be in peril, and create a response plan
as needed.
Do you have any final words for us?
We’re confident that you won’t find another GIS like LOCATION Analyst in the industry today. It’s the only GIS resource that fully integrates ISO data in an automated way. An insurer would incur heavy costs to automate that data into its book of business for GIS analysis. We think the combination of state-of-the-art technology, a comprehensive library of geographic data, powerful spatial analytics, and custom reports makes LOCATION Analyst the optimal solution for portfolio analysis.
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