Geographic concentration of risk has always been a concern regarding areas prone to natural disasters such as flooding or earthquakes. In the wake of September 11, 2001, man-made catastrophes that can affect urban areas are also an issue.
After the 9/11 terrorist attacks, Greater New York Insurance Companies (GNY, New York, $200 million direct premium), an underwriter of residential and commercial property with a large portion of its business in Manhattan, found it had a new challenge, according to Kathy Hurley, GNY's assistant vice president, MIS. "Reinsurers who would normally reinsure larger amounts of risk were not as willing because they were trying not to spread themselves out so thin." In order to reassure them, "we wanted to show where our risks were and what our total exposure was in a certain area so that they felt more comfortable doing business with us," she recalls.
Risk by Product and Exposure
GNY decided it needed a mapping solution to guide its own underwriters and demonstrate sound decisions to underwriting partners. "We wanted to be able to see all the risks we had by product and exposure, within a certain radius," Hurley explains. "We wanted to be able to make a query such as, 'Within 1,000 feet of the Empire State Building, what's my total exposure? Is it $2 billion, is it $5 billion? If the Empire State Building were to fall down tomorrow, what's my risk?'"
The carrier looked at solutions from MapInfo (Troy, NY), CDS Business Mapping (Boston), Baseline Business Geographics (Charlottetown, PEI) and Millbrook, Inc. (Bethlehem, PA). After a demonstration at GNY's IT offices in East Brunswick, NJ, MapInfo adapted its product to the insurer's requirements and "came in with exactly what we needed," Hurley adds.
The insurer installed a MapInfo Web server in its New York offices, for availability over the company intranet. To populate the software with relevant information, "we had to create a download file from our AS/400 back-end system with all our policy, claim and accounting information," Hurley relates. Once a week, "we upload that into Microsoft Access, then run geocoding of the data via MapInfo, which takes about eight minutes for the 50,000 to 60,000 records." The resulting Access file is imported into the Access production database.
Using a Microsoft Explorer browser users can search any geographic radiususually of 500 feet or greater, drawn from a given address plot point-to view coverages by product and exposure. A map including the chosen radius makes up a large portion of the screen. "A legend on the right-hand side will tell you what points displayed represent," Hurley explains.
"If it's a product search, a green dot may be a package policy, a blue dot an umbrella, etc. If you're searching by exposure, red dots might be $5 million and higher, blue might be $2 million and higher, etc." Dots can also be sized by exposure. Advanced query options include agent code, construction code, product, protection class and policy type. "We can search by any combination of up to three of those codes to narrow a search, and we can also search by ZIP code," Hurley says. Summary information is provided graphically, and results can be exported into a Microsoft Excel spreadsheet, links to which are below the legend.
Costs for the solution included about $25,000 for hardware, plus $64,000 for software, training and maintenance costs during the first year. The carrier will disburse another approximately $40,000 over the next two years, through the duration of the three-year contract, reports Hurley.
While the product yields no "hard" ROI benefit, its value is evident in its popularity among the carrier's underwriters. "It has become an integral part of the underwriting procedure now," Hurley says. "It gives them reassurance that they're making the right decisions, and it makes the reinsurers feel comfortable that they are too."
-----------------------------------------Case Study Closeup
COMPANY: Greater New York Insurance Companies, New York, $200 million direct premium.
LINES OF BUSINESS: Commercial multi-peril and workers' compensation products.
VENDOR/TECHNOLOGY: MapInfo (Troy, NY) customized mapping solution.
CHALLENGE: Graphically display geographic concentration of risk.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio