Risk Assessment

Underwriting, the task of deciding what risks to insure, allows insurers to discriminate between good and bad risks and to adjust rates accordingly. Risks have a geographic component—different types of claims are more prevalent in different areas.

GIS helps insurers analyze, visualize, and distribute risk spatially while avoiding redlining, which is illegal in the U.S. and elsewhere.

Insurance companies use GIS to

• Identify areas of peak loss potential.
• Map historic patterns of claims to understand the true spatial distribution of risk.
• Segment high-risk policies by geographic sales region and territory.
• Manage the different rules and possibilities for determining risk and rates that exist for different states, provinces, and countries.
• Identify the types of claims most likely to be made in given areas, and develop prevention plans accordingly.
• Map areas prone to fraud and develop prevention plans accordingly.

There are many ways more insurers can use GIS for risk assessment and mitigation. Adding that geographic component is critical to finding that delicate balance between risk, profitability, and fairness to customers.