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How do insurance companies use GIS data?

23rd August 2021 Print

Nothing in life can be fully predicted, and loss and unfortunate events can happen anytime and anywhere. There is no perfect way to accurately predict them. In such a case, the maximum we can do is take precautions. Insurance is the said precaution that allows us to protect ourselves from any thinkable financial loss.

Given the modern era of technology, there are various tools and technologies in use that help make the matter easier to handle and operate. Today, we will be looking into one such tool— GIS data in insurance. We will understand what it is and how it can be useful. Then, without further ado, let us get right into the matter! 

What is GIS? 

GIS stands for Geographic Information System and is a tool that can analyze and capture geographical and spatial data of a given area. In insurance companies, insurance-related GIS is used to analyze and determine location-based data of any given area to understand its risk factors and closeness to hazards. 

Say, someone wants to get insurance for a property at a certain location. Insurance companies, with the help of GIS, can acquire all necessary data regarding that property and of the area around it. This can help them determine the risk factors of the property and help build their customer’s profiles. 

Benefits of GIS in Insurance 

There are various GIS data advantages that an Insurance company can make use of. Down below, we have listed the top advantages. It will also give you a fair idea of how GIS is utilized by Insurance companies. 

- Help monitor fraudulent activities by analyzing policyholder details, location details, and spatial analysis of the area/property in question

- Helps calculate risk by giving in-depth insights and details of location 

- Helps provide low premiums for highly valued insurances by dividing a given area into numerous territories, thus decreasing the premium that needs to be paid 

- Provides features such as Geo-fencing that are useful for car share and rentals. 

How is GIS data used in the Insurance industry?

Lastly, let us understand how insurance industries use GIS data.

- Management of claims

GIS helps insurance companies understand and know more about customer locations as well as surrounding risk locations. This information can further help process claims during restoration, repayment, and compensation when the customer has incurred damage or loss. Through this method, companies can quickly and efficiently respond to customer claims. 

- Risk assessment

GIS is a truly effective tool to detect risk. It helps determine disaster proximity to provide accurate risk assessments. It provides detailed information on model situations and other unknown problems and provides the most suitable solution to minimize risk as much as possible. With the level of risk known, the premium value can be determined easily. 

- Management of territory

GIS provides analysis showing the geography and how it may interact with said assets or hazards. This helps companies manage their territory well to reduce risk. GIS also helps by installing and establishing required networks so that it becomes easy for you to function within your territory.