In today’s ever evolving world, the insurance industry is no stranger in adapting to innovative technologies that drive efficiency, accuracy and profitability. One such powerful tool that has gained significant traction is the Geographic Information System (GIS).
The Geographic Information System is a computer-based system used to capture, store, manage, analyse and present spatial or geographic data. This cutting-edge technology – rooted in spatial data analysis – offers a wide array of benefits to the insurance sector, enhancing risk assessment, market penetration and customer accessibility.
GIS is a great tool in offsite risk assessment for insurance underwriting. Insurance companies have long relied on historical data and actuarial calculations to assess risks associated with various policy coverages. However, by integrating GIS into their risk assessment process, insurers can now gain a comprehensive understanding of the geographic attributes that contribute to potential risks.
For example, when underwriting homeowner’s insurance, GIS enables insurers to analyse whether properties fall within earthquake-prone zones or are situated in close proximity to waterways, fuel stations or other high-risk areas. Similar can also be said of health insurance for example, where customers in certain geographic areas are more likely to suffer from certain medical conditions like guinea-worm infestations, bilharzia, kidney-related diseases, etc. This invaluable spatial insight allows insurers to accurately evaluate risks, leading to more informed policy pricing and enhanced risk management.
Should there be a natural disaster like an earthquake, flood or any natural disaster in certain parts or whole of the country, insurance companies that use GIS to enhance their underwriting will be saved from being overwhelmed with insurance claims.
GIS also serves as a crucial tool for insurers to measure the geographic spread of customers, thereby assisting in determining market penetration. By mapping policyholders’ locations and overlaying it with demographic data, insurers can identify areas with low coverage or untapped markets. This geographical intelligence helps insurers optimise their marketing and distribution strategies, enabling them to target specific regions for potential business growth. In turn, insurance companies can enhance their market reach, drive customer acquisition, and foster long-term profitability.
The use of GIS also aids insurers in making informed decisions when it comes to strategically siting business offices or locations. By analysing demographic data, transportation networks and customer distribution patterns, insurers can identify optimal locations that ensure easy access for customers and efficient service delivery. Whether it is opening new branches or relocating existing ones, the power of GIS allows insurers to make data-driven decisions – thus improving customer convenience and satisfaction.
Furthermore, GIS can be instrumental in catastrophe management; enabling insurers to quickly assess the extent of damage and allocate resources effectively during natural disasters.
As the insurance industry embraces the digital era, harnessing the power of GIS has become imperative for staying ahead of the curve. Insurance companies that invest in GIS technology can gain a competitive edge by improving risk assessment accuracy, enhancing market penetration strategies, optimising customer accessibility and streamlining operational processes.
Geographic Information Systems (GIS) have proven to be a game-changer for the insurance industry. By utilising GIS for offsite risk assessment, insurers can make more informed underwriting decisions. Additionally, GIS aids in measuring market penetration, identifying untapped markets and optimising the siting of business locations. As the insurance landscape continues to evolve, leveraging GIS technology becomes increasingly vital; enabling insurers to stay agile, competitive and customer-centric in the modern era.
The writer is a Principal Geodetic Engineer at Single Eye Engineering Consult Ltd.
Areas of work: Land surveying, Remote-sensing, drone surveys, road geometric design and GIS
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