Coastal Risk

More than fifty-three percent of the United States population lives in a coastal county and exposure to tropical weather systems in those areas continues to be on the increase.   Property and Casualty companies concerned about their coastal exposure have implemented a number of strategies to reduce their risk.  These strategies are often broad in nature and range from statewide new policy moratoriums, not issuing policies within a certain distance of the coastline or completely pulling out of coastal areas.

CoreLogic's Coastal Risk provides an increase in overall granularity by combining five data sets; Coastal Surge Risk, Hurricane Propensity, Coastal Water Feature and Mainland Determination, and Elevation into an easy to use and understand scoring method.  CoreLogic's Coastal Risk provides insurers a more accurate property-based methodology to understanding hazard risk information so insurers can better understand a property's coastal risk exposure for improved underwriting without resorting to broad brush exclusion strategies.

With Coastal Risk, insurers will not only improve underwriting decisions, they will be able to: reduce the potential for loss and adverse selection over traditional insurance practices, understand their potential for surge loss, and determine the potential for hurricane losses resulted from storm surge.  Coastal surge and hurricane propensity files are available for the Atlantic and Gulf coastal areas while the other data sets cover all coastal waters and the Great Lakes.

For example, a recent Storm Surge Report found more than $234 billion in residential storm surge exposure in 13 U.S. cities. Click here to register and read the full report.

• Coastal Risk

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Flood

Underwriting guidelines have traditionally relied on whether a property is "in" or "out" of a federally designated flood zone, yet historically between 25-30% of flood insurance claims come from properties located outside of the flood zones.

Although federal flood maps remain useful in limited situations, underwriting private insurance requires a more advanced and precise risk assessment that identifies high-risk properties outside of designated flood zones, lower risk properties inside the flood zone, and includes additional key risk factors such as the presence of levees and dams. CoreLogic's Flood Risk Score provides this advanced level of risk assessment on both riverine and coastal surge flooding.

Primarily used as an advanced tool to enhance underwriting capabilities, the Flood Risk Score can also be applied to policies and portfolios, offering enhanced aggregate analysis capabilities.

WildFire

Increasing development of homes near or adjacent to the Wildland Urban Interface (WUI) means increases in wildfire home losses.  The cost to protect these structures is estimated to be in excess of $1 billion each year.  To reduce exposure to loss, insurance companies must ensure that policy premiums and underwriting guidelines correctly reflect potential risk.

CoreLogic's Wildfire Risk database provides the information needed for accurate underwriting by identifying an individual property's risk vulnerability.  Developed using CoreLogic's modeling expertise and the recognized "best practices" of both government and fire research laboratories, the database identifies property risk potential by scoring the risk based on the property's distance to high brush fuel zones, and the distance to the WUI (the boundary zone where populated areas adjoin wildlands).

CoreLogic's Wildfire Risk database consists of two key data layers:

Brushfire Fuel Rank

CoreLogic's Brushfire Fuel Rank data model is designed to assess relative brushfire risk based on four factors: slope, aspect, vegetation (fuel), and vegetation composition. The mathematical combination of these four variables results in a numeric range of values that is subsequently divided into 4 risk categories: Very High, High, Moderate, or Low. This model simplifies the assessment of risk and provides insurers reliable information needed to accurately determine brushfire risk for a defined area or specific location.

FIREbreak+

FIREbreak+ is the first comprehensive tool for accurately assessing the brushfire risk along the WUI.  It identifies a policy's proximity to high risk vegetation and its residential density class, helping insurers make informed risk determinations for AK (populated areas only), CA, CO, FL, ID, MT, NV, NM, OR, UT, WA and WY.

Single Wildfire Risk Score

CoreLogic's Single Wildfire Risk Score rates properties on a 0-100 scale, allowing insurers increased flexibility in determining risk categories, as well as an opportunity to utilize the data in other applications.

Based on CoreLogic's statistical analysis of thousands of wildfire home losses, the four contributors to wildfire loss are weighted to generate a single risk score.  The risk scale offers insurers the option to create a proprietary set of conditional rules so they can:

• Accurately write policies without extensive onsite investigations
• Carefully consider policies in areas where the brushfire risk is disproportionately high due to location characteristics
• Flag locations with potential risk generated by on-property and surrounding (off-property) brushfire risk factors for onsite inspection

Earthquake

Since 1999, the United States has averaged more than 3,000 individual earthquake events per year. CoreLogic's Earthquake Risk database incorporates current earthquake science and information, producing a probabilistic risk database which covers the United States including Alaska and Hawaii. The modeled database accounts for peak ground acceleration (ground shaking), earthquake faults, geologic structure, and soil type to produce the earthquake hazard risk estimation.

Fire Protection Class

The CoreLogic Fire Protection Class (FPC) is used by insurers to assist in the calculation of fire risks for residential, commercial and public properties based on fire suppression capabilities. FPC is a component of CATUM, CoreLogic's insurance application which provides Enterprise Policy Lifecycle Risk Management. Departments throughout the entire insurance company benefit from precise geospatial location determination and spatial analysis. Insurance companies use FPC to establish fire premiums based on this geospatial risk analysis.

GeoSpatial Fire District Zone Determination

The closest fire station may not be the servicing fire station for a property. CoreLogic has developed geospatial fire station district boundaries for every fire department across the country. When evaluating a particular property, our PxPoint geocoder and Fire District Boundary Layer combine to return the correct servicing fire station for that property. There is no need to wait on database updates as FPC automatically assigns the correct fire district at the time that the home or business is built. Additionally, using geospatial boundary determinations, fire district boundary reassignments are expedited and global to all affected properties. CoreLogic FPC is not limited to municipalities as we report on all fire departments across the nation.

Using CoreLogic FPC Data Analytics

Superior fire risk measurements require geospatial data returns. FPC uses latitude/longitude, assessor parcel data, municipality boundaries, servicing fire station districts, and road networks to provide spatial analysis that is critical to risk analysis and in premium pricing. Latitude/longitude and parcel data precisely locates the property. Municipality boundaries determine proximity to fire hydrants. Fire station districts depict the responding station location. Road networks allow for driving or "Manhattan" distance from the station to the property. Insurers can develop their own Fire Protection Class risk score and pricing methodologies using the CoreLogic FPC solution. Insurers can also follow criteria such as set forth by the American Association of Insurance Services, Inc., which follows and is supported within FPC:

• Protected -- Buildings located within five road miles of a responding fire department and within 1,000 feet of a fire hydrant are to be classified as Protected, as follows:
• Protected 1 - One mile or less from responding fire department.
• Protected 2 - More than one mile, but two miles or less from responding fire department.
• Protected 3 - More than two miles, but three miles or less from responding fire department.
• Protected 4 - More than three miles, but four miles or less from responding fire department.
• Protected 5 - More than four miles, but five miles or less from responding fire department.
• Partially Protected -- Building is located more than 1,000 feet away from a fire hydrant, but is within five road miles of a responding fire department.
• Unprotected -- Buildings located in areas that are classified as neither protected nor partially protected.

Risk Concentration

One of the challenges facing property and casualty companies is the ability to accurately identify a concentration of policy risk within a geographic area. Traditionally, property and casualty companies have attempted to measure risk concentration by counting the number of policies in a defined geographic region, such as counties, cities or ZIP codes. However, this method does not identify whether policies are clustered or dispersed within a given geographic region.

To address this, CoreLogic developed a set of grid layers in varying square-mile areas for all 50 states, which have been integrated within our insurance solution, CATUM, as layer options. CATUM processes street addresses using its proprietary high-precision parcel-level geocoding and spatial analysis technology and appends a cell identification to each record according to the selected grid matrix. Insurers can then import files into their reporting application and generate reports detailing the number of policies and the total exposure in a specific area. Appended files can be shipped in shapefile format for map display.