Mankind has had to deal with a lot of natural and man-made disasters during the current year, from the devastating tsunami that ripped apart Japan to the London riots. And one of the worst hit was the insurance industry.
In what could offer a huge sigh of relief to insurers, a new report from Celent titled, “Location Intelligence Solutions for Insurance: A Solution Spectrum” examines how insurers can employ geographic information systems to support underwriting, claims and post-event analysis. The report also profiles seven GIS vendors that have multiple insurance clients in Europe or the United States.
“There is a large swath of vendors offering GIS solutions to a variety of sectors all over the world,” the report states. “However, for a GIS solution to add value to the insurer, it needs to be able to store, search and act upon the construct of an insurance policy,” says report author Catherine Stagg-Macey, Celent SVP, Insurance.
For example, a GIS offering should provide a commercial property underwriter a map highlighting other insured properties in the area. Depending on the appetite for new risk given the aggregate risk for the area, the underwriter can then decide to proceed or not.
“Making this decision without the support of spatial data would be nigh on impossible,” Stagg-Macey says in the report. “For assessment of likely claims, GIS systems offer similar strong business advantage. Plot the area of impact of the riot or flood, and the system is able to sum up all current exposure in that area.”
In addition to business advantage, the report notes that employing GIS may help insurers better handle upcoming regulatory changes, such as the Solvency II requirements in the EU. Due to come into force in 2012, Solvency II will require insurance companies to model and hold sufficient liquid assets to cover the largest losses that could arise in any one area.
“Investment plans are unique to every insurer, and so the time to invest in GIS capability will vary,” the report concludes. “Celent believes that such capability is an interesting addition to the options for technology-enabled business improvement, and one worth while making when the time is right.”
Source: Insurance Networking