Postal codes can be key to hidden exposures

By taking the six digits of a postal code into consideration, rather than the first three digits, underwriters can determine risk levels of a particular area on a far greater detail, including whether or not a property is located in a flood plain or in an area with adequate fire protection, said Alan Pang, director, property and casualty insurance business services, CGI Risk Management Services.Pang spoke at the Property Casualty Underwriters Club luncheon in downtown Toronto about the benefits of the Fire Underwriting Survey (FUS) and Geographic Information Systems (GIS) for underwriting.Using GIS, he showed a map of Edmonton just after the July 2004 flood, with the individual postal code areas and the total of insured damages within each area.He pointed to two postal code areas, each with the same first three digits and on the banks of the North Saskatchewan River. The first, he said, had 7,602 homes and incurred a $51.1 million dollar loss.The second, he continued, had 3,611 homes and incurred $4.46 million in property damages.Using GIS and FUS, he said, could allow an underwriter to look at each postal code and analyse the protective infrastructure in the immediate area, as well as geographical features that may cause an exposure that the insurer otherwise would rather not take on.