first published week of:   01/30/2023

7 Reasons Why Geospatial-Based Property Ratings Should Replace Historical Territory Ratings

by Tammy Nichols Schwartz, CPCU

Decreased profits can stem from a lack of granular, accurate information about potential hazards and exposure to loss at each insured location.

Although traditional territory-based ratings have been a part of the actuarial tool kit for decades, they pose major issues and challenges to product managers, actuaries, underwriters and information technology teams. One key reason why is that most perils are not correlated with ZIP codes, state or municipal boundaries, yet territories are often underwritten and defined by these boundaries.

The P&C insurance industry’s combined ratio is forecast to worsen to 105.6% from 99.5%, according to the Insurance Information Institute. Over the past several years insurers have been teetering around the edges of profitability. The industry must find better ways to assess, underwrite and price risk — and more accurately select and price policies in line with the actual risk of a property.

 Read full story at PROPERTYCASUALTY360…

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