CRESTA zones can boost penetration in emerging markets
Accurate and consistent boundary data is the foundation for managing risk across Asia, Christine Werner from GfK tells SIRC Today.
The size of the protection gap in many Asian markets represents a big opportunity for risk transfer companies that are able to accurately assess the risks. But while many companies are seeking growth in the region and investing in new risk models in the process, the real key to success will be ensuring the underlying data is of sufficient quality.
This is the view of senior geodata consultant Christine Werner at GfK, which offers detailed, global boundary data for use in risk models. GfK supplies this geodata in the form of digital postal and administrative boundaries as well as CRESTA zones, which provide a common currency for the exchange of aggregated, insurance-related information among insurers and reinsurers.
Created in collaboration with Munich and Swiss Re, CRESTA zones offer a unified basis for referencing location-related risk data and represent the industry standard today. GfK is the official provider of this geodata, thanks to its decades of experience in generating digital boundary data and its detailed global coverage.
Werner says that in emerging markets in particular, the key to unlocking insurance growth potential and detecting potential accumulation risks lies in using accurate and consistent geographic base data.
“We are seeing more risk models being developed in Asia, which is a good thing. It reflects the market’s growth and will help close the protection gap.
“Successful analyses depend on accurate, consistent boundary data. Even small inconsistencies in the base data can exponentially increase the margin of error,” she says.
Precisely for these reasons, she says, all the major risk modellers and reinsurance brokers use GfK boundary data in their respective systems, and more companies in Asia are recognising the advantages of using CRESTA boundary data as a common standard.
Risk models are only as good as the foundational data on which they are based, Werner says. Up-to-date boundary data is thus a crucial component for successfully managing risk in emerging markets.
CRESTA zones are especially important, because they allow users to analyse, aggregate, and share risk information accurately and consistently for broad market areas.
Werner stresses that insurance penetration rates in emerging markets can be accelerated by insurers who correctly use the very latest risk models and mapping data available to the industry. This approach allows them to easily and accurately price risk even in relatively undeveloped markets.
Werner highlights some upcoming enhancements to GfK’s offering, including greater detail along some asset-heavy coastlines in Asia, especially in Taiwan, Japan, Vietnam, and Malaysia. GfK is also increasing its six-digit postcode coverage of multiple Chinese cities.
Werner says demand for GfK’s data products and expertise is rising, especially in Asia, as more companies appreciate the importance of using an industry standard such as the CRESTA zones.
“Our data gives users the ability to accurately exchange data and the results of analyses,” she says. “This is the cornerstone for successfully sharing data and insights in the industry. CRESTA zones and other GfK geodata allow insurers and brokers to bring greater precision to their risk assessments and thus achieve better outcomes.”
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