CoreLogic Rates Risk of Property Damage Loss from Natural Hazards by U.S. State

The vendor’s new CoreLogic Hazrd Risk Score (HRS) calculates the aggregated risks associated with highest-granularity geospatial data pertaining to nine natural hazards: flood, wildfire, tornado, storm surge, earthquake, straight-line wind, hurricane wind, hail and sinkhole.

(CoreLogic Hazard Risk Score map, based on geocoded locations measuring 10 x 10 meters. Source: CoreLogic.)

CoreLogic has released an analysis ranking U.S. states for highest risk of property damage caused by nine natural hazards. Florida scored highest in the analysis derived from the CoreLogic Hazard Risk Score (HRS), an analytics tool launched this month that gathers data on multiple natural hazard risks and combines them into a single easy-to-use score ranging from 0 to 100. The overall score indicates risk exposure at the individual property and location level. Michigan ranked lowest.

For every geocoded location across the U.S, the CoreLogic HRS is compiled using data representing flood, wildfire, tornado, storm surge, earthquake, straight-line wind, hurricane wind, hail and sinkhole. Locations with higher risk levels are exposed to multiple hazard risks and will, therefore, receive higher scores when the risk analysis is aggregated, CoreLogic statement explains. Subsequently, locations with minimal risk levels have lower exposure and receive lower scores. Geocoded locations are generated at the property-address level using latitude and longitude coordinates and include both residential and commercial properties.

(Related: $968b in Storm Surge Risk Concentrated in 15 Locales, CoreLogic Analysis Finds)

“Florida’s high level of risk is driven by the potential for hurricane winds and storm surge damage along its extensive Atlantic and Gulf coastline, as well as the added potential for sinkholes, flooding and wildfires,” comments Howard Botts, Ph.D., VP and chief scientist, CoreLogic. “Michigan alternatively ranks low for most natural hazard risks, other than flooding.”

The proprietary CoreLogic HRS is able to calculate risk based on a 10 x 10 meter grid, the highest level of granularity available for the underlying hazard data, according to the vendor. In calculating the overall score, both the probability of an event and the frequency of past events are significant contributing factors used to determine risk levels associated with individual hazards, as well as each distinct hazard’s risk contribution to total loss. The data is combined into an aggregated, consistent and normalized value that allows statistically valid combinations to be derived, CoreLogic reports.

Compare and Combine

“In the past, natural hazards have been difficult to compare and combine in a meaningful way,” Botts adds. “Hazard Risk Score is a single solution that measures risk concentration consistently and pinpoints the riskiest places in the U.S. with timely and granular accuracy. This insight is critical in conducting comparative risk management nationwide and fully understanding exposure to potential natural hazard damage.”

CoreLogic says that insurers can use CoreLogic Hazard Risk Score to improve decision-making and enhance a variety of business operations, including:

  • Business continuity and disaster recovery planning
  • Analyzing risk associated with a residential property or portfolios of properties
  • Measuring mitigation savings vs. total hazard potential damage
  • Evaluating and determining natural hazard risk levels of distribution and supplier networks
  • Recognizing which underinsured or uninsured properties may become at risk of default
  • Adverse selection avoidance and identification of “good risk” properties

Below: U.S. Natural Hazard Risk by State (ranked by CoreLogic Hazard Risk Score. Alaska and Hawaii are omitted owing to limited hazard data. Source: Core Logic.)

HRS-State-Table2.jpg

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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