Mapping for risk management
ICICI Lombards use of a GIS solution for risk management
was the first project of its kind in the Indian insurance industry. by Venkatesh
Head, Operations & Technology
Risk management is defined as the process of planning, organising, leading
and controlling the activities of an organisation in order to minimise the effects
of risk on the said organisations capital and earnings. Enterprise risk
management expands this process to include not just the risks associated with
accidental losses, but also financial, strategic, operational, and other risks
ICICI Lombard used a Risk Management System (RMS) that helped it zoom into spatial
level risk data representing real-world entities including both geo-referenced
and quantitative attributes attached to it at a national scale. It also used
GIS solutions to use tools, maps, and latest census demographic data.
This helped the company get a clearer picture of the levels of risks associated
not just with financial information, but also with natural risk-prone geographies.
It allowed the company to understand its customers better and make strategies
according to the more accurate levels of perception offered by the solution.
A Unique Deployment
Anuj Gulati, Head Operations and Technology, ICICI Lombard, says, The
use of a GIS-based RMS was essentially to identify areas on a map with high
population density, a large concentration of rental properties, or other demographic
characteristics that affect whether to underwrite a property for fire or burglary
Further he reckons that it can determine if a home is in a
flood plain, near a fault area, or is susceptible to wild fires and other hazards
to make informed decisions on whether to underwrite a property for hazard insurance
or find the driving distance to the nearest fire station or police station.
Explains Gulati, For an insurance organisation like us it makes sense
to have such systems as it helps in determining the correct details of a property.
Project Leader, GIS Application
It is interesting to note that the project began in February
2004 and was completed in seven months (September 2004) flat. The Web part of
the project took about ten months (began in November 2004 and ended in September
2005). All together it cost Rs 35 lakh.
The organisation used an application called MapXtreme to supplement its RMS.
Gulati says, MapXtreme (RMS-Web Map Server) provides support to Microsofts
ASP, including sample applications to let us build applications faster and easier.
It has an XML dataset for accessing XML data sources and ships with XML and
Oracle OCI sample applications.
MapXtremes open architecture works with any Web server and takes advantages
of ISAPI or CGI gateways. In addition, it has no proprietary plug-ins, so it
delivers maps to any Web browser on a PC or UNIX workstation. It provides a
comprehensive list of powerful mapping functions to meet various mapping needs.
The RMS application resides on Windows 2000 OS. The system interacts with MS
IIS server, MapXtreme 2004, Oracle 8i, MapInfo 7.0 and GIS OLAP reporting tools.
There is also a GIS OLAP reporting tool, which is a report builder to facilitate
the users to generate fixed or dynamic reports as per requirements.
We generate close to 3,000
policies a day, and began to look at options after realising that real-time
information access was crucial to our employees for delivering the right
product to our customers. We address that with a combination of ERP, CRM
and an insurance accounting system. We are thrilled that our innovation
has received this recognition.
In managing insurance policies, getting the correct details
is of prime importance. Gulati believes that if the system for analysing the
information related to policy and customer concentration service is available,
decisions are much more accurate, efficient and quick.
Another reason for deploying such systems was to incorporate regulatory requirements
of Nat-Cat (Natural Catastrophic) limits in reinsurance treaties, provide real-time
information of potential damages in case of a natural calamity and provide business
intelligence requirement at the geographical level to ensure elimination of
This application helps to manage risks in a better way,
and operate more efficiently by geographically assessing and analysing
information about underwriting, risk management and customer service
Since the implementation of the new systems, the claims processing
takes a shorter turnaround time. Says Gulati, GIS helps claims processors
use the customer or claim location address on a map relative to other claims
and to boundaries such as flood and storm limits. In case of reinsurance, it
helps in better premium count by identifying good and bad risks. Damages are
assessed and modelled to help the reinsurer predict the results of future events,
thus providing more accurate underwriting.
A big advantage has been the increase in the number of customers. The GIS software
combined with Government of Indias census demographic data packages allows
insurers to profile potential and existing customers and perform predictive
modelling to find new opportunities.
One Of Its Kind
- Indian Farmers
Fertilizers Co-operative Limited's (IFFCO) digital signature-based e-procurement
system to promote e-commerce among the organisation and its value chain
Online Position Monitoring System (OPMS) and Risk Management System
for the Capital Market segment of the National Stock Exchange
The RMS helps to zoom into spatial level risk data representing
real-world entities including both geo-referenced and quantitative attributes
attached to it at a national scale. This application helps to manage risks in
a better way, and operate more efficiently by geographically assessing and analysing
information about underwriting, risk management, and customer service.
MapInfo, a Geographical Information System (GIS) based desktop application is
used for deploying the RMS and help assess and analyse information related to
policy and customer concentrations. It includes risk information and analysis
of different nature, such as estimated impact of frequency and severity of earthquakes
or other natural calamities, which ultimately leads to efficient management
of risk and correct pricing of policies.
Though it is too early for the company to talk on ROI, it has predicted that
over a period of three years, it would be able to increase the revenues by Rs
The systems have already benefitted nearly 50 employees in
reinsurance and underwriting. According to Gulati, once the Web-based module
is rolled out, it will benefit 800 more employees and around 35,000 customers.
ICICI Lombard's GIS-based Risk Management
Date started: August
Date completed: December
Project cost: Rs 35
To create a first-of-its-kind RMS that helps zoom into spatial-level risk
data representing real-world entities including both geo-referenced and
quantitative attributes attached to it at a national scale
A combined use of risk management software along with GIS-based locational
data to understand the project better
ICICI Lombard has an aggressive future road map. Gulati says that it plans to
add various BI related features, such as time-series analysis and trend analysis,
which will be available to the sales force. The system would also allow rural
data mapping, weather insurance, analysing historical weather information depicting
natural catastrophes and allow for corporate database mapping.