How GIS Benefits the Insurance Industry

Where are driving conditions more dangerous? Where are natural disasters more likely to occur? Where are the nearest urgent care centers for residents of rural Wisconsin?

These are questions about geographic data that auto, home and health insurance companies need to answer for themselves and their customers. When you think of who uses location intelligence mapping and GIS services, the insurance industry may not be what comes to mind. But geographic information is valuable in helping many insurance companies with challenges that are unique to their industry. 

GIS benefits insurance companies in two primary ways: assessing risk and providing accurate data about any given location. Here’s how that plays out.

Risk Assessment

Every insurance company has premiums, and the amounts customers must pay aren’t just selected randomly; they’re based on real-world data gathered by underwriters. This data provides insight into the chances that the company will have to pay claims or encounter losses. The greater the risk, the more likely the insurance company has to pay — meaning a higher premium for the policyholder.

That’s not the only deciding factor that goes into insurance premiums, but it’s a big one. And GIS data makes it possible. 

Auto insurance companies need to know the landscape and traffic patterns of every location they cover. If a policyholder drives in an area with dangerous terrain, there’s a higher risk of an accident. The same goes for a driver located in a major city like Los Angeles, where such a high number of vehicles on the road at once may increase the risk of accidents — even if they’re mostly fender benders. 

Depending on the company, drivers can sometimes qualify for safe driving discounts on their premiums. This may require gathering real-time data from the vehicle itself and comparing it to the GIS data for the area. 

Is the driver following the speed limit? Part of that picture is provided by the GIS data that shows the speed limits for each area. There may also be discounts based on the routes taken or how often the vehicle is used.

Companies insuring homes also conduct risk assessments to determine the chances they’ll have to pay claims. They can look at historical data and compare different maps and GIS information to see if tornadoes have gone through that region in the past, or if it’s a geographical area that’s more prone to flash floods.

For example, coastal areas are generally at greater risk of experiencing hurricanes and are thus more likely to sustain heavy damage, so the premiums there will likely be higher than they’ll be in an inland location.

Related: Why GIS Mapping Using Drones is the Way of the Future

Location Accuracy

Everything hinges on accuracy. Insurance companies are using GIS information to make important financial decisions — and those decisions could cost them in lawsuits, penalties or reputation if they’re not airtight and accurate.

• An auto insurance company that declines to provide a safe driving discount to someone who’s followed the speed limit because the insurer has inaccurate speed limit data for that location could find themselves paying for it in the end 
• If a home insurer has given a higher premium to a home that they believe is in a low-lying, flood-prone area, they could be in trouble if it turns out their topographical data was wrong and the home is actually on high ground that’s never been flooded
• Health insurance companies depend on accurate location data, too. Most have online tools their members can use to find in-network health care providers within a certain radius from their home. If a member conducts a search for an emergency room within 15 miles of their ZIP code and can’t find one on the site — even though there actually is one matching that criteria — the consequences could be dire for the member and the insurance company

Finally, most insurance companies have salespeople or agents who work to sell the products, and they’re usually split into different territories. How those territories are determined is up to the insurer or agency, but if it’s based on location characteristics in any way, the data must be accurate for a fair and even divide.

Read More: 5 Reasons to License Map APIs or Map Data Through a Reseller

TomTom Products for Insurers

Insurers seeking accuracy in their location data and services need look no further than TomTom. TomTom has a wide array of products that help many industries — including different types of insurance. Take a look at what’s available.

MultiNet Route, Find & Display

A visual map as well as geocoding information and the generation of efficient routes are all possible with MultiNet Route, Find & Display. 

Download Route, Find & Display sample →

Administrative Areas

Administrative Areas provides detailed and accurate boundaries for municipalities and census-defined divisions.

Download Administrative Areas sample →

Speed Profiles

Speed Profiles uses trillions of data points to analyze traffic patterns.

Download Speed Profiles sample →

Address Points

Address Points uses data from government and private sources to provide accurate address information.

Download Address Points sample →

The Future of GIS

We can’t emphasize the importance of accuracy enough. It’s absolutely critical not just in the insurance industry, but in every industry that relies on GIS and mapping information to conduct their operations.

If you’d like to learn more about GIS benefits contact our team of experts.