Case Study: Flood Risk
Flood-determination analysis was conducted by comparing parcel-based geocoding against Ecopia’s building-based geocoding, which is built on the foundation of Ecopia's Building Footprints. The analysis revealed that over 1 million homes across the US are likely underpriced for flood risk. These properties, incorrectly identified as low-risk properties by parcel-based geocoding, have primary buildings that reside within a flood zone and are exposed to flood risk. These policy holders are underpaying for their insurance and could expose the portfolio to substantial claims.
Further, we found that over 600,000 properties were likely overpriced for flood insurance policies. These properties, incorrectly identified as high-risk properties by parcel-based geocoding, have primary buildings that are well outside of the flood zone, and not exposed to flood risk. These policy holders are overpaying and more likely to search for more fairly priced offerings from other insurers, leading to potential customer churn and lost revenue.
This zone-based analysis can be applied to other perils such as fire, hail, hurricanes, earthquakes, and landslides, to reveal underpricing and overpricing scenarios that arise as a result of parcel and street-based geocoding inaccuracies.
Where $43 billion of hidden property risk resides
across the US
By taking the average flood claim for each of the underpriced homes, the risk of underpriced policies alone can be estimated at $43B. This figure does not take into account the risk arising from other perils such as wildfire, hurricane, earthquake, etc. When considering these other perils, the risk is likely multiples higher.
This heat map illustrates where the highest concentration of underpriced and overpriced homeowner policies are located.