WIREDGOV

British insurance companies are missing out on revenue from properties in flood‑risk areas, according to new research* from Ordnance Survey.

A study by Britain’s national mapping agency exposes potential lost profits reaching millions of pounds because properties are inaccurately classified.

Following last year’s floods, which cost the insurance industry an estimated £3 billion,** Ordnance Survey conducted analysis of more than 270,000 addresses located in Peterborough, Kingston upon Thames and Carlisle. Using OS MasterMap, its large-scale geographic database, and detailed historic data on flooding from the Environment Agency, Ordnance Survey has established that more than a quarter (26.7%) of properties could be inaccurately classified as being at risk of flooding.

“Buildings situated in specific postal‑code areas are often automatically pre-marked as ‘at risk from flooding’, which our analysis proves is very often not the case in reality,” says Sarah Adams, Insurance Sector Manager at Ordnance Survey. “As a result, insurers could be overlooking or offering, uncompetitive quotes for certain addresses, and are losing out on potential revenues. By extrapolating our findings to a national scale, the problem is likely to be costing insurance companies millions of pounds every year in lost opportunities.”

However, insurers using geographical information systems (GIS), which focus on analysing individual households rather than postcodes, can better assess the real risks involved and calculate appropriate premiums accordingly. This avoids the problem of low-risk houses being refused insurance or quoted unnecessarily high premiums. GIS users can offer a better deal to customers when many of their competitors are working on inaccurate data.

Digital mapping, such as OS MasterMap, allows insurers to look at each property individually when considering its risk profile. When looking at flood risk, height and the distance from the nearest body of water are among of the primary factors. A detailed map gives the insurers the opportunity to “see” the location of the property in detail and make a better informed decision as to the risk that particular property affords.

OS MasterMap is Ordnance Survey’s flagship large‑scale geographic database and was used for the research project. It contains approximately half a billion uniquely identified geographic features and is updated with an average of 5,000 changes every day. It records every fixed feature of larger than a few metres, all in one continuous digital map. This creates a detailed database containing the most up‑to‑date information available to insurance companies at just the touch of a button.

** ABI – SUMMER FLOODS 2007: LEARNING THE LESSONS

1. Ordnance Survey is Great Britain’s national mapping agency, providing the most accurate and up-to-date geographic data, relied on by government, business and individuals.
2. To download this news release visit www.ordnancesurvey.co.uk/media. There you can also subscribe to our RSS news feed.
3. Ordnance Survey, the OS Symbol and OS MasterMap are registered trademarks of Ordnance Survey. Environment Agency is a registered trademark of The Environment Agency.

Paul Beauchamp – Senior Press Officer – on 023 8079 2568 or paul.beauchamp@ordnancesurvey.co.uk

Paula Good – Senior Press Officer – on 023 8079 2635 or paula.good@ordnancesurvey.co.uk