Environmental factors such as subsidence, droughts, increased flooding, and soil erosion have long been a part of risk assessments. However, now more than ever, it is important that available datasets are harnessed to remove any added layers of uncertainty as situations evolve. At present, more than 5 million homes and businesses in England are at risk of flooding (according to Environment Agency estimates). Therefore, accurate location data to pinpoint a given property exactly, is essential. Concerns around the predicted impact of climate change are multiplied given the UK also has an aging housing stock. In fact, a 2017 report from the BRE shows that 20% of housing in England alone was built pre-1919. Many of the properties in the UK are therefore not suited to withstand the changing conditions, so knowing where buildings are, and whether they can handle a changing environment, is imperative.
The UK government and the wider market have also begun to focus on how homeowners can be incentivised to make changes to their homes to better equip them. For example, some companies are looking to bill customers based on their environmental rating, or to set lower mortgage rates for buyers looking to borrow for an A-rated EPC home.
The pandemic has led to more people working from home, which in turn means more properties are being adapted rather than designed specifically for their intended use. While the residential property sector is both flourishing and undergoing huge change, the non-residential market saw a steep decline with the drop in demand for office space. As a result, commercial buildings are being converted for residential use. This is adding to the uncertainty around whether properties and assets can really stand the test of climate change in their location in the longer-term.
Using addressing data to bring clarity in times of uncertainty
There are 45 million addresses in the UK, but not all databases can help lenders to accurately describe the wider context of a property or asset. While most people are familiar with postcodes used to help indicate where properties are for post, datasets such as this are not sufficient to paint an accurate picture for assessing risk to individual properties and valuable assets. Postcodes, for instance, were designed exclusively for the efficient delivery of mail, so while the postman may be able to find a property by using a postcode, when these can cover areas as huge as 442km2, this cannot be used as an accurate indicator of the environmental risk that one particular property or asset will potentially face.
Layering accurate geospatial data with data from a local authority or third-party data provider can better facilitate the assessment of factors such as resources, events, risks or behaviours that will influence over the lifetime of a property. With a comprehensive picture of these elements, including exact location, Unique Property Reference Numbers (authoritative
identifiers used to uniquely identify addressable locations in Great Britain), names and numbers of alternative addresses and location and volume of access points, lenders can gain unparalleled context at the level of individual properties. Essential decisions can therefore be made for specific buildings in contrast to broader clusters of properties and assets. Companies need this critical insight and improved understanding to better evaluate the kind of cover that should be offered to homeowners. In addition, accurate addressing data on individual properties can also be used as a tool for fraud analysis, to remove an additional layer of uncertainty.
Putting good addressing foundations into place
Accessing insights through accurate addressing data is not necessarily about having the most data. Lenders need to also consider the currency of the data, that is, how recently it was captured, and when choosing a dataset, assess its frequency to understand when it will be updated, and therefore, how quickly the dataset evolves with changing times. AddressBase from Ordnance Survey is continuously updated with change and provides an authoritative source of information which users can trust and rely on. Only with a dynamic dataset to hand can lenders look to mitigate against rapid environmental changes, such as flooding and subsidence. In our data-driven world, it is vital that these elements of addressing data ‘hygiene’ are in hand, to protect against this uncertainty and also harness the data to gain in speed and profitability.
At Ordnance Survey, we have worked with Aviva and Partners to use AddressBase addressing data to better assess risk. The insurance company’s dedicated Geographical Information Systems (GIS) team used the addressing data with their desktop GI systems (ESRI ArcGIS), and integrated it with other datasets, to process flood and other climate change models. This helped them to recognise trends that would otherwise have been hard to recognise and as such, were able to create rating factors and pricing models that best reflected reality.
Europa Technologies, an OS Partner, has also worked with some of the UK’s most successful insurers to conduct precision risk analysis using addressing data capable of revealing flood risk for individual address. In a similar way, this has also unlocked more competitive premiums for UK customers as well as more accurate and reliable underwriting.
As these examples highlight, lenders are already gaining greater insights from better addressing data, but this can only happen if core considerations are made. Unlocking insights that can move with risk and climate change predictions requires access to dynamic datasets that are maintained and updated regularly. Only the most authoritative dataset can help to ensure that layering can happen with other types of data too, so that fuller pictures can be created, visualised and accurately assessed. With more layers of uncertainty added to a lender’s perspective, it is becoming more important that the fundamentals are in place to avoid accumulating risks. Addressing data is a tool that can be used to unlock the certainty the industry needs now.
John Kimmance is managing director of National Mapping Services, Ordnance Survey
