Study highlights data reveals extent of resolution issues
Insurtech firm Insurdata’s newly released study into exposure data resolution reveals significant and potentially costly inaccuracies in a large proportion of the geolocations.
Paul Burgess, head of client development at Insurdata, told Monte Carlo Today that the extent of the inaccuracies may come as a surprise.
“In the property cat space insurers, reinsurers and brokers have long felt and qualitatively understood that there are problems with the underlying data, but some of the messages coming out of the study, actually quantifying the extent of that problem, are going to surprise some people,” Burgess said.
The exposure data resolution study focused on a sample portfolio of US-based insured properties. Of the 4,500 locations assessed in the report, more than 40 percent (over 1,800 locations) were displaced by more than 10 metres, with 10 percent of the location data inaccurate by between 500 to 1,000 metres.
The combined results showed an average displacement of 183 metres for the entire dataset, with the largest displacement being 33 kilometres.
Additional analysis conducted by Insurdata at the individual company level has revealed that the net impact on modelled loss estimates of correcting location latitudes and longitudes can have a material effect on average annualised loss estimates.
Commenting on the degree of displacement evident in the data, Burgess said: “It is important to consider this level of displacement in the context of standard accumulation zones.
“If a re/insurer is applying a 200-metre accumulation zone for its terrorism exposure, for example, our study reveals that at a minimum 6 percent of the risks will fall outside the accumulation zones they are believed to be in, while locations with smaller displacements could also be outside the zone perimeters.”
Insurdata seeks to address the problem by providing insurers and reinsurers with building-level property data delivered at the point of underwriting, to enable more accurate pricing, and to support underwriting and risk assessment decisions.
The data is generated using Insurdata’s Exposure Engine and accessed via an application programming interface or the Insurdata Customer Portal.
“We are saving analysts 50 percent of the time they were spending correcting and enhancing the data,” said Burgess. “That means they are freed up to do far more value-adding activity.”
