Insurance Made Easy

CDS Mapping Services for Insurers

Rating Territory Validation

Identifying the proper rating territory is critical to accurate policy underwriting. Unfortunately, identifying the correct rating territory is not always a straightforward task. Cities, zips, counties, towns, rivers, roads and other features can define territories. Interpreting territories from written word can be difficult to do. Therefore, assigning the proper territory can be a difficult, error-prone and time-consuming task. Additionally, many states impose strict fines on companies that improperly code rating territories, as it is a key element in calculating premiums.

CDS has a solution to this problematic task! Using the RiskMeter Online and GIS (geographic information system) mapping technology, CDS can accurately assign territories with ease and speed. Using the RiskMeter, companies merely enter an address to check territories with street-level accuracy.

This process can identify the correct territory codes for all insurance lines, including homeowners, auto, and commercial property.

The Process:

The insurer provides their rating territories to CDS in paper or electronic format (like a Word document of .PDF). CDS then uses digital maps of streets, cities, towns, rivers, etc. to create a new detailed digital map of rating territories for a state. This process is known as digitization. Our digitized maps have street-level precision, and allow you to check the proper rating territory for any address. Once your rating territory map has been digitized, finding the correct territory is as simple as entering an address.

The Benefits:

Quick-	Validating the Rating Territory takes only seconds
Accurate-	Digitized maps are accurate to the street level Territories can be defined in any manner - Zips, cities, streets, rivers or a combination of all of these, and the process still works!
Simple-	It's as easy as typing in an address. Even for split territories!
Efficient-	Territories for multiple lines of business can be returned concurrently

Batch Processing Available:

We also offer batch processing to our customers. Users can send us their renewal book monthly to validate rating territories prior to sending out renewal notices. While verifying territory codes, we can also append additional underwriting characteristics such as the distance to coast and windpool eligibility.

Real-Time Integration/Validation Available:

Using the RiskMeter Client™ your system can interface in real-time with the RiskMeter Online. This way, your territories can be validated instantly. Other risk information, such as distance to coast, windpool eligibility, proximity to brush, etc., can also be returned. Contact CDS for further details.

Why Geographic Determinations are Simply the Best:

ZIP Codes cannot be used effectively in many cases. In several states, the department of insurance will not allow insurers to make rate filings by ZIP Code. Therefore, although this seems like a simple answer, it is not. Further, in urban areas, many companies split ZIP codes, thus rendering this method ineffective. Furthermore, ZIP Code boundaries can and do cross city boundaries. Therefore, if you have defined your territories by cities, counties and towns, the ZIP Code list you are using does not accurately reflect your territory definitions.

Lookup Tables are ineffective. Some companies have created "lookup tables," where based upon the city name, the territory is automatically assigned. However, in many instances features like rivers or roads are used to define territories. In these cases (split territories), the territory cannot be automatically assigned. You must ask the user to use a written definition to determine the correct territory. With RiskMeter Online's digitized maps, users can avoid this time-consuming process!

Standardizing Addresses does NOT solve this problem. Although standardizing addresses does improve the process, Postal Standardization (CASS) does not take into account things like incorporated vs. unincorporated areas. Even more importantly, standardizing the address can put the property into the wrong territory! The standardized city name may not be the city in which the property is located.

The Process Should And Can Be Automatic. When using a lookup table, in any area where there is a question, you are probably relying on the input and judgement of the user. If this person is the agent or insured, there is an incentive for them to make a mistake (lower premiums). Even for the underwriter, to research the proper territory can easily take 5-10 minutes. It is also very easy to misinterpret the written definitions. We can eliminate this inefficiency and improve accuracy.

Our geographic determination is the best way to avoid these costly and complicated errors.

The Pay Off:

Recent studies suggest that roughly 10% of policies have been assigned the wrong rating territory. By properly assigning rating territories to policies, you can increase your premiums by 1%, with very little work. Further, by correctly rating policies, you would avoid claims on polices you won only by making a pricing mistake!

It is a very simple concept and the result is net income increase of 1% purely by making sure policies are rated correctly!

Your book is 50 MM
10 % are rated incorrectly
of those you could increase premium 10%
1% of 50 MM

$500,000 free and clear directly to the bottom line

For more information Contact Dan Munson at 617 737 4444