GfK GeoMarketing Magazine 4/2014

Geomarketing
GfK GeoMarketing Magazine | 04 - 2014
APPLIED
GEOMARKETING:
SMALL POSTCODE,
LARGE IMPACT page 16
INTELLIGENT ANALYSES
THROUGH STRATEGIC
page 8
LINKING
MAPS:
PURCHASING POWER
EUROPE & PURCHASING
POWER FOR FURNITURE
GEODATA:
CONNECTED THINKING
02 | EDITORIAL
EDITORIAL
Dear reader,
There's no shortage of information in this age of Big Data, but information
alone doesn't lead to insights. New perspectives require linking information
from across all company areas.
Geodata serves as the thread that binds together disparate data into a network of information. Postcodes or municipal IDs are ideal ways to link, organize and analyze large quantities of data according to a unified principle. This
strategy makes it possible to carry out detailed regional evaluations of market
opportunities and risks.
GfK geodata is enriched with information on geography as well as regional
market traits, such as purchasing power, consumer segmentation and branchspecific sales potential. As such, this data provides a reliable basis of planning
across national boundaries and company divisions.
In this edition of the magazine, read about how our geodata helps companies
link important information and extract valuable insights.
Sincerely,
Wolfram Scholz
Managing director, GfK GeoMarketing
CONTENTS
NEWS & IMPORTANT DATES
| 03
MAPS
STUDY
| 04
Purchasing Power Europe and
purchasing power for furniture, Germany 2014
European purchasing
power climbs slightly
KNOWLEDGE USE CASE FROM PITNEY BOWES
| 08
Intelligent analyses
through strategic linking
EXPERT PERSPECTIVE
Retail parks: Sustainable investment
or hype?
GfK GEOMARKETING MAGAZINE 04 - 2014
| 16
Small postcode,
large impact
USE CASE FROM AON BENFIELD
| 12
| 14
|18
Geodata in
risk modeling
WEBNEWS & IMPRESSUM
| 20
NEWS & IMPORTANT DATES | 03
NEWS & IMPORTANT DATES
NEW MAPS AND PURCHASING POWER DATA SHOW A EUROPE IN FLUX
The maps of the Europe Edition have been updated and expanded. These maps reflect
the many regional, reform-related changes that have occurred throughout Europe, such
as the municipal reform in Portugal. There have also been many changes to purchasing
power levels across Europe, as illustrated by our 2014/2015 purchasing power data,
which fits seamlessly with our maps. Read more on pages 4-6.
PURCHASING POWER FOR RETAIL
PRODUCT LINES
Germans devote the largest share of
their retail purchasing power to food, beverages and tobacco; home improvement
and clothing. The GfK study on 2014
purchasing power for retail product lines
reveals the many regional differences
in purchasing power levels throughout
Europe. In 2014, Germans have an average of €455 per person for spending on
furniture and furnishings. Of this amount,
€322 is available for furniture. Inhabitants of Munich have the highest average
per-capita purchasing power for furniture
at €466, which is 44 percent above the
national average.
More information at www.gfk-geomarketing.com/retail_product_lines
RETAIL REAL ESTATE INSIGHTS
GfK Real Estate Consulting presented two research projects
related to retail real estate in publications by partner companies:
In the HAHN Report, we present research on the potential of
retail real estate as a whole, and particularly for investors. In our
widely publicized contribution in the MEC Report, we discuss retail parks, including how this retail real estate format is currently
positioned as well as prospects for its future development. Our
expert Manuel Jahn also composed a white paper on this subject,
excerpts of which can be read on pages 12-13.
More information at www.gfk-geomarketing.de/rec
ENGLISH VERSION OF
REGIOGRAPH 2014
We released an English version of our
geomarketing solution RegioGraph
2014 concurrently with our GfK Europe
Edition. The new software version includes many new useful and time-saving
features as well as maps and purchasing
power data for a European country of
choice. RegioGraph is also available with
geocoding capability for more than 60
countries.
More at www.gfk-regiograph.com
04 | STUDY
EUROPEAN PURCHASING
POWER CLIMBS SLIGHTLY
Purchasing power in Europe climbed by around two percent this year.
The amount of disposable income available to Europe's inhabitants depends
largely on their country of residence. There are especially notable differences
between northern and western European countries as well as between central,
southern and eastern European countries.
A total of approximately €8.83 trillion is
available to European consumers in 2014
for spending and saving. This corresponds to
an average per-capita purchasing power of
€13,112 for the 42 countries under review.
Europeans consequently have around two
percent more disposable income than they
did in the previous year. This equates to a
slight rise for consumers in most countries.
According to the European Central Bank, the
inflation rate for 2014 will be one percent for
the 28 European Union member countries.
There are considerable differences among the
European countries in terms of the amount
available to private consumers for consumption-related purchases. While Norway has a
disposable per-capita income of €30,560,
GfK GEOMARKETING MAGAZINE 04 - 2014
Bulgaria has just €3,097, which is just around
one-tenth of the Norwegian figure.
The ranking of the individual European
countries has changed compared to last year:
STUDY | 05
Denmark climbed two places to the fifth
spot. Germany, Great Britain, Malta, Lithuania, Estonia, Croatia, Bosnia-Herzegovina,
Macedonia, Kosovo and Belarus all moved
up one spot. Albania was the biggest loser,
dropping four spots to third last. Sweden
went down three places to the eighth position. The Czech Republic fell two spots, while
Belgium, Cyprus and Turkey all fell one spot.
Many of these changes are due to exchange
rate fluctuations between the euro and the
local currency in question.
As was previously the case, there's a very
noticeable prosperity gap between Western
and Northern Europe on the one hand, and
Central, Eastern and Southern Europe on the
other. The countries with low purchasing power have however slowly recovered in recent
years. But they still suffered some significant
setbacks due to the financial crisis.
France and Great Britain:
Similar, yet different
With €19,643 in per-capita purchasing
power, French citizens have almost 1.5 times
the European average. The distribution of
purchasing power in France reflects the power relations in this centralist country: Only
two of the 22 regions have above-average
values - Ile-de-France (119.4) and RhoneAlpes (101.4). Even the third-ranked region,
Provence-Alpes-Cote d'Azur, lies just under
the national average (99.4). Nord-Pas-deCalais (86.1) and Corsica (89.5) are at the
other end of the region rankings.
Paris leads France's 330 arrondissements by
a clear margin. Inhabitants of the French capital have an average of €30,796 per person,
which is more than 1.5 times higher than the
national average. Residents of Saint-Denis
bring up the rear with €13,919 per person.
This figure amounts to almost 30 percent
below the national average and only 45 percent of Parisians' purchasing power.
With €15,664, inhabitants of the coastal city
of Calais are fifth from last in the rankings
of country's districts with the least purchasing power. These inhabitants thus have just
under 20 percent less at their disposal than
the national average.
On the other side of the English Channel,
the district of Dover in Great Britain has a
purchasing power roughly on par with the
country's average. With €17,589 per person,
Dover residents have on average eight percent less purchasing power than the British
average. At €19,136, the British per-capita
national average is around €500 less than
the corresponding French average. As such,
Brits have around 36 percent more purchasing power than the European average.
But inhabitants of Nottingham County, the
English county with the least purchasing
power, only beat the European average by
one percent.
More than a couple of boat lengths lie between the counties of Oxford and Cambridge:
Cambridgeshire loses the purchasing power
race by €1,422 (€20,457 per person, index:
106.9; Oxford: €21,879 per person, index:
114.3). But the tables are turned when these
figures are evaluated at the level of the more
granular districts: Oxford lies around seven
percent below the British average (index:
92.6), while Cambridge is only minimally
below that threshold (index: 100.6). These
lower rankings are explained by the many
students in the city center areas who tend
to have lower purchasing power levels. By
contrast, the surroundings areas in both
counties attract residents with high incomes
and thus also high purchasing power.
Two Baltic tigers go head-to-head:
Lithuania and Latvia
Lithuania's approximately 2.9 million inhabitants have a total purchasing power of €21.8
bil. This corresponds to a per-capita purchasing power of €7,395. As such, Lithuanians
lie 56 percent below the European average.
Inhabitants of the capital district of Vilnius
have the most purchasing power - €8,543
per person, which is 15 percent higher than
the national average. At the other end of
Lithuania's ten districts is Taurages, with
€6,004 per person and an index of 81.2.
Klaipeda, the second wealthiest region in
Lithuania, is located around 100 km from
Taurages.
Latvia's approximately 2 million inhabitants
have somewhat less money at their disposal
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06 | STUDY
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GfK PURCHASING POWER
EUROPE 2014
PER INHABITANT
source: GfK Purchasing Power Europe 2014/2015; Eurostat exchange rates published on July 10, 2014
than their southern neighbors. Latvians have
an average per-capita purchasing power of
€6,921. This amounts to a total purchasing
power of €13.85 bil. As such, Latvians also
have slightly above half of the European
average.
Similar to Lithuania, the Latvians with the
most purchasing power are those in the
region around the capital of Riga: These inhabitants have on average €7,969 per capita,
which is 15 percent higher than the national
average.
At the other end of Latvia's five planning
regions is Latgale, located in the eastern
part of the country. This region has a
purchasing power of €5,164 and an index of
74.6. Latvia's eastern area along the border
with Russia and Belarus has, on the whole,
significantly less purchasing power than the
western area of the country. The gap between rich and poor is also substantially wider
in Latvia than in neighboring Lithuania. Of
the country's 119 municipalities, only 15
percent have a purchasing power level equal
to or greater than the national average. The
prosperity gap is even more apparent when
viewed at this granular level.
GfK GEOMARKETING MAGAZINE 04 - 2014
The port cities of Riga in Latvia and Klaipeda in Lithuania are clear purchasing power
strongholds and underscore the importance
of the export trade to the Baltic tigers and,
by extension, to the economic wealth of their
inhabitants.
ABOUT THE STUDY
Put simply, GfK Purchasing Power refers to the total net income
by region. As such, GfK Purchasing Power is the most important
indicator of consumer potential, or the income available to the
population of a given area for consumption-related expenditures.
GfK Purchasing Power is calculated exclusively in euros to ensure
cross-comparability. The exchange rates published by Eurostat
on July 10, 2014 are used in the case of non-euro countries.
Additional results from the current purchasing power study for
Europe can be found at www.gfk-geomarketing.com/pp-europe.
INTERESTED IN GfK PURCHASING POWER EUROPE?
We're happy to answer your questions about data on potential
and the best cartographic basis for your Europe-wide planning
endeavors.
Contact: Alexandra Deutsch, Sales Consultant, Geomarketing
alexandra.deutsch@gfk.com | T +49 7251 9295 170
Order new GfK purchasing
power Europe data online:
shop.gfk-geomarketing.de/en
TAP MORE MARKET
POTENTIAL WITH GEODATA
Digital maps of postcodes and municipalities are the backbone of
geographic analyses. Determine your actual market potential with
our regionalized market data, such as the new GfK Purchasing
Power Europe 2014/2015.
Growth from Knowledge
www.gfk.com/market_data
www.gfk.com/maps
08 | KNOWLEDGE
INTELLIGENT ANALYSES
THROUGH STRATEGIC LINKING
“Only connect!” wrote the English novelist, E. M. Forster. “Live in fragments
no longer.” This famous injunction could serve as an information-management
strategy for the modern-day reinsurance industry and any other industry in
which location-based factors play a role.
Finding connections amidst fragments
Faced with a deluge of data ranging from
loss sums, premiums and asset values to
weather statistics, natural catastrophe trends
and countless other risk-related variables,
the reinsurance industry currently struggles
to pinpoint the most crucial insights amidst
these endless details.
A geographic approach to data management brings dramatic clarity to this disparate information. This is because linking
and visualizing information on maps - using
the geographic component that most data
contains - quickly reveals both how these
variables interrelate and how they distribute
across a given market area. This so-called
“geomarketing” approach allows reinsurers to
GfK GEOMARKETING MAGAZINE 04 - 2014
see, at a glance, how their portfolios and risk
profiles stack up from region to region.
Tapping the potential of postal boundaries
Address-based data is like a vast collection
of individual trees. The actual forest formed by these trees can only be recognized
via some higher organizational structure.
That’s precisely the role played by postcodes.
These postal boundaries make it possible to
preserve individual point data while simultaneously linking them to a structure and
analyzing all associated information. This
approach reveals regional trends and data
relationships that would otherwise be difficult or impossible to spot. Postal boundaries
are not the only regional level that can be
used as a basis of analysis. Other possibi-
KNOWLEDGE | 09
lities include administrative levels such as
municipalities, districts, states and statistical
regions. But postal boundaries offer distinct
advantages over these other options. One
reason is that virtually every country in the
world has a postal system, which gives users
a worldwide geographic basis of planning
that supports comparisons and analyses
across national borders.
Also, there tends to be a certain logic to
postal demarcations that corresponds to the
structure of the street network and natural
boundaries such as rivers, lakes and mountains. Finally, postal boundaries are typically
more granular in densely populated areas.
This is ideal for risk management, because
insured assets are often highly concentrated
in more urban areas.
Correctly digitized postal boundaries also
provide comprehensive coverage, without any
gaps or overlaps. In other words, every inch of
a given market is assigned to a specific postcode. Each of these postcodes is an enclosed
polygon that can be used to store, compare
and analyze a wide variety of information.
Going beyond mere illustrations
A geomarketing approach to risk management goes far beyond simply displaying
values on maps.
After importing postcode-based data into
a GIS or mapping software, this information
becomes associated with the corresponding
postal polygon. Each polygon functions as
a data repository that can be used to store,
analyze and cross-reference a limitless variety and quantity of information.
Relevant market data can also be incorporated, such as values on purchasing power,
number of inhabitants and household types.
New insights can be extracted by crossreferencing two or more variables. In this
way, the postal polygon serves as a primary
building block for constructing data models to pinpoint trends and predict future
developments. Using postal structures as
a primary planning level thus makes it possible to maintain control over the immense
volumes of data streams associated with
risk management.
GETTING STARTED
WITH REGIOGRAPH
Learn how to analyze your company and market data on digital maps in
our two-day RegioGraph training course. Experienced instructors walk you
through the fundamentals of the software and offer practice-based tips.
Growth from Knowledge
www.gfk-regiograph.com/training
10 | KNOWLEDGE
Capitalizing on the Russian doll principle
Another advantageous feature of postal
boundaries is their nested structure. In
other words, more detailed postcode levels
– such as five-digit postcodes - fit perfectly
inside less detailed postcode levels, akin to
the way traditional Russian wooden dolls fit
inside one another.
This structure offers tremendous benefits
when it comes to planning and managing
risk. For example, data on insured values
or points of impact can be compiled and
displayed at the five-digit postcode level
for micro-planning and analysis. Or a less
detailed level can be chosen to illustrate how
these values are distributed over a broader
market area. Users can easily drill down or
scale up to the desired level of detail depending on the application. In short, this ability
to move between different granularities provides enormous flexibility for displaying and
analyzing risk-related information.
Connecting information for
penetrating insights
Geodata that fulfills these requirements
makes it possible to yoke together the vast
quantities of information with which the
reinsurance industry must contend. The
previously hidden trends and relationships
between premiums, loss sums, past claims,
insured values, damage probabilities and
countless other variables become visible
when this information is linked and displayed
geographically. Postcodes comprise the basis
of these analyses in the reinsurance industry
and indeed in any case involving large quantities of data with this shared geographic
component.
Postcodes make it possible to carry out
highly detailed analyses as well as track and
compare values across multiple regions and
markets. Put simply, postcodes help transform information into actual insights.
ADDITIONAL INFORMATION
GfK offers the largest collection of digital postcode and administrative maps available on
the market, with coverage of the entire globe. And we're also the official supplier of the
worldwide CRESTA zones for the reinsurance industry. We regularly update and expand
all our geodata, as boundaries and regional statuses undergo constant and often drastic
changes due to reforms.
Learn more in our webinar "Manage worldwide risks with GfK geodata &
CRESTA zones" at www.gfk-geomarketing.de/webinar-risk-management.
WANT TO FIND OUT MORE ABOUT OUR GEODATA?
Please contact Katrin Ubert, Sales Consultant, Geomarketing
katrin.ubert@gfk.com | T +49 7251 9295 150
GfK GEOMARKETING MAGAZINE 04 - 2014
Order and download market data at
shop.gfk-geomarketing.de/en
»»
GfK MARKET DATA:
AN OBJECTIVE BASIS
FOR YOUR ANALYSES
Do you need to objectively evaluate the performance of your branch sites? Want to
identify regions that offer untapped potential for your company? Use our market data to
evaluate your entire market according to objective criteria. All data offers comprehensive,
regionalized coverage for an entire country of your choice, or even specific catchment
areas or street segments.
Growth from Knowledge
www.gfk.com/marketdata
12 | EXPERT PERSPECTIVE
RETAIL PARKS:
SUSTAINABLE INVESTMENT OR HYPE?
GfK retail expert Manuel Jahn explores in a white paper whether retail parks constitute a sustainable investment with genuine substance or an overhyped asset with grave consequences down
the road. As part of the study "GfK Retail Park Performance Report," our experts carried out
on-site evaluations of around 250 retail parks according to more than 20 criteria. The resulting
insights offer retailers and investors a valuable basis for making more informed investment and
expansion decisions.
Our Real Estate Consulting division recently carried out a comprehensive analysis of
Germany's retail parks that was subsequently
published as the "GfK Retail Park Performance Report". The report is an extension of
our analyses for the MEC retail park report,
which was presented at the Expo REAL 2014
in Munich. The GfK analysis encompasses
250 retail parks and investigates factors
such as anchor tenants, sales area, infrastructure, performance as well as upside and
refurbishment potential.
GfK retail real estate expert Manuel Jahn
explains why retail parks offer attractive
growth potential for investors: "We estimate
Germany's retail park market consisting of
250 retail parks at around €12 billion on
the basis of the object-specific sales area
productivity and feasible rent-to-sales ratios.
With currently a 20 percent share of the
transaction volume of retail real estate, retail
parks have now assumed the status of a
stand-alone asset class."
In the first half 2014 alone, €900 mil. has
been spent on this asset class according to
an evaluation of the transaction statistics of
the large real estate brokers. These half-year
figures show that around 7.5 percent of the
entire market volume has been traded - a
figure that should rise to 10-15 percent by
the end of the year.
"Assuming this market dynamic holds steady,
retail parks would change ownership every
7-10 years on average," explains Manuel
Jahn. "Retail parks can already be regarded as a sustainable investment alternative
GfK GEOMARKETING MAGAZINE 04 - 2014
thanks to the increasing professionalization
in this asset class, which is marked by higherquality new buildings, a larger number of
successful refurbishments, better targeted
tenant concepts and a growing management
quota. These numbers outshine the previously favored shopping center investments
and awaken the interest of investors, particularly institutional investors."
Retail parks are a meaningful retail real estate class not just for investors, but also for
retailers, who must also separate the wheat
from the chaff when it comes to selecting
viable locations. According to Jahn, the size
and turnover associated with these locations can differ enormously: "For retail parks
between 10,000 m² and 76,000 m² of sales
area, the turnover spread is even wider,
from €15 million to just under €300 million
per year."
The branch mix of retail parks is dominated
by grocery offerings. GfK's analysis of 250
retail parks in Germany revealed that the
turnover share for groceries ranges from €2
million to €90 million, depending on the retail park concept. Fashion offerings generate
turnover from €0.5 to €30 million p.a.
The GfK Retail Park Performance Report is
meant to provide transparency and investment security for location decisions. GfK's
analysis helps in this regard by offering
insight into locations' need for revitalization.
This evaluation led to some surprising results. "Using a scoring model, we were able
to rank all researched locations according to
their quality as investments," explains Jahn.
"On the whole, one would assume that none
EXPERT PERSPECTIVE | 13
of the top retail parks are in need of revitalization. Even so, in some cases it is foreseeable that wide-reaching adjustments will have
to be made; these will need to go well beyond
merely cosmetic alterations in order to avoid
losing market share to the competition."
The best retail parks are not always located
in central metropolitan areas. For example,
one of the top retail parks is located in a
greenfield area.
"Established and successful retail parks that
have been around a while were often erected
in out-of-the-way commercial areas that are
not well integrated into the city infrastructure and also often not visible from the main
street axes. The fact that these have nonetheless established themselves in consumers'
minds during their decades of existence
shows that typical place-related factors don't
always play the decisive role."
ADDITIONAL INFORMATION
The complete white paper from Manual Jahn on retail parks can be accessed at
www.gfk-geomarketing.com/download-retail_centers.
The GfK Retail Park Performance Report can be obtained
directly from GfK.
Contact: Manuel Jahn
Head of Real Estate Consulting, Geomarketing
manuel.jahn@gfk.com | T +49 40 5701 325 35
14 | STUDY
TIP:
Browse our gallery of European maps of purchasing
power for retail product
lines at www.gfk-geomarketing.com/market_data/
retail_product_lines.
GfK GEOMARKETING MAGAZINE 04 - 2014
STUDY | 15
TIP:
Browse our gallery of maps
of purchasing power for more
than 60 countries at
www.gfk-geomarketing.com/
purchasing_power.
16 | USE CASE
GEODATA FOR BI ANALYSES
THAT GO A LONG WAY
Pitney Bowes is a long-standing partner of GfK. The company offers its clients GfK geodata to
enrich their data analyses. Andy Bell, Director of Global Data Product Management at Pitney
Bowes Software, explains why geodata plays an important role for their clients in industries
such as insurance and retail.
Pitney Bowes (PB) has been used to handling
big volumes for decades: in the 1920's, we
developed one of the first mass-stamping
machines. Today, PB offers solutions for the
full cycle of modern business analyses. And
we help our clients find solutions for spatial
challenges along the way. MapInfo is one of
the most-used GIS in the world, and with
Spectrum, our enterprise platform, we complement this classical stand-alone software
expertise with cutting-edge server-based
spatial analytics.
our solutions. We and our clients appreciate
that their boundary data on postcode and
administrative levels covers the whole world.
In this way, clients can easily expand their
analyses and plannings, as the GfK data is
consistent in its set-up, and offers complete
and seamless information on geographic,
administrative as well as market potential
indicators. In BI, it is also important that any
integrated data do not cause problems – be
it questionable results, gaps or breakdown of
the system due to bugs.
Our offerings can be summed up as technology plus data plus service. And GfK comes
in with the data part. For many years now,
they've been a reliable partner and provider
of worldwide geodata - digital maps and data
on regional market data - which is used in
GfK's geodata fully meets these requirements: it is highly detailed, yet easy to
integrate and handle. That is why we've also
chosen to integrate their digital maps in
our solution "Spectrum spatial for BI". With
this tool, our clients have a spatial analysis
GfK GEOMARKETING MAGAZINE 04 - 2014
| 17
enhancement for their BI applications. The
visualization of data based on digital maps
makes it much easier to recognize hidden relationships between seemingly unstructured
or disconnected data items. And the maps
and the spatial analytics go far beyond mere
visualization: Our tool allows an interactive
geographic drill-down into any integrated
data. The map experts from GfK support this
drill-down feature by providing resolutionsensitive renderings of their vector-based
map data. One of our clients, an internationally active retail chain, enriched the geographic information with additional information
by GfK on the regional purchasing potential for clothing in Spain, for example. This
helped them make better site selections.
And our clients from the reinsurance industry use GfK's worldwide boundary data on
the CRESTA risk zones in their systems to
accurately aggregate and gauge local risks
and loss sums.
Big data is a slightly overused term in my opinion. But we and many of our clients need to
be able to handle millions of data transactions
per second in our systems. Spatial analytics
with a robust and detailed geodata basis such
as GfK's are cornerstones in these analyti-
cal processes. And by effectively ordering
the large data quantities based on the place
denominator, this supports our clients in their
decision processes in highly complex market
situations and helps them go a long way.
ABOUT PITNEY BOWES
Pitney Bowes Inc. helps companies of all sizes connect with their
customers and consumers with customer communications technologies. Pitney Bowes had revenues of approximately USD$5 billion
in 2012 and employs more than 27,000 people worldwide. Today,
Pitney Bowes serves more than two million clients in more than
100 countries. Based in Stamford, Connecticut, Pitney Bowes has
locations in all regions of the United States and does business in
130 countries throughout the world. Offerings include software
for location intelligence, geocoding and reverse geocoding, data
quality and integration, and customer communications management, among other fields such as stamping solutions.
Andy Bell joined PB Software in 2012 and
is Director of Global Data Product Management. Located in the UK, he is responsible
for data product strategy, pricing and
market positioning for a diverse range of
location based and business intelligence
data assets.
Contact him at andrew.bell@pb.com.
GfK RETAIL PARK
PERFORMANCE REPORT
Consult this new GfK report for an overview of all retail parks in Germany
and the most important object-specific factors, such as tenant mix, sales
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More information at
www.gfk-geomarketing.com/retail_center_report
18 | USE CASE
MAPPING RISK – GEODATA IN
CATASTROPHE MODELING
Impact Forecasting, the catastrophe model development center within Aon Benfield,
creates risk models for all kinds of natural and man-made catastrophe risks. We spoke to Chris Ewing, catastrophe model developer at Aon Benfield, about what makes
their catastrophe risk models so reliable and valuable to clients.
Chris, please tell us a little about what your
team does and what its role within Aon is.
In the Impact Forecasting team we develop models of natural and man-made risks
around the world. This includes terrorism as
a man-made peril, and all natural catastrophe
risks - e.g., earthquakes, hurricanes, wind
storms, floods, hail, etc. Within Aon Benfield,
we provide solutions for risk analysis, portfolio optimization, advising our clients about
catastrophe modeling, pricing and cost recovery, and economic capital modeling.
What is the role of geodata in risk models?
A catastrophe model consists of four components: exposure, hazard, vulnerability and
financial loss. Of these, hazard and exposure
are closely related to geodata – all hazards
and all insured assets have a location, after
all. For example, we developed a hail model
for South Africa and within it the model
contains a specific exposure component for
cars. It is based on GfK boundary data for administrative units in South Africa, as well as
information on the road network and urban
areas. This was the basis for assessing the
car density distribution.
A very important feature of GfK's maps for
correctly locating risks is that the boundaries very accurately depict natural structures
such as coastlines, rivers and roads. Using
this geodata for insured locations - in this
case, cars - we can locate areas of high loss
risk in the case of new hail storms in the
region. Generally, higher resolution data (e.g.,
building level coordinates or fine-resolution
postcode boundaries) is needed for floodrelated perils, whereas lower resolution data
(county or regional boundaries) is needed for
wind-related and earthquake perils.
GfK GEOMARKETING MAGAZINE 04 - 2014
Aon Benfield uses a diverse range of GfK
geodata – what are the different use cases?
For example, our pan-European windstorm
model supports geocoding on two different
regional units: CRESTA zones and postcode
levels. Both are used for accurately reporting
accumulated damages, but on various levels
of detail, and by different users within the
reinsurance industry. For building the model,
it was necessary to have a very detailed
geodata basis that covers all of Europe. The
nested structure of postcode levels and the
two CRESTA zone resolutions that GfK provides data for later make it possible to aggregate data for reporting - and to transfer data
from one reporting unit to the other.
GfK geodata fulfills our requirements for
boundary data, in that all data is available in
a consistent format and without overlaps or
gaps, it is topologically correct and also there
are regular updates, because boundaries like
postcodes change a lot. How do your clients benefit from this?
Firstly, clients benefit from more insightful
risk scenarios thanks to the suitably detailed
geodata basis that is used for setting up the
models and available for reporting accumulated risks. Secondly, GfK geodata is important
for the visualization side of our models with
graphs, charts and maps. Maps are particularly useful for looking at multiple events and
showing where the peak hazard zones are
for a particular peril. They help understand
uncertainty and risk better by providing an
overview of where events are concentrated.
The old adage of "a map tells a thousand
words" is certainly true!
USE CASE | 19
Mapping Windstorm Christian modeled losses in Winter 2013: Peak gust measurements from the UK Met Office were
combined with wind climatology of Europe to build realistic footprints for the storm. Impact Forecasting's ELEMENTS
Explorer was used to visualize and map wind speed gusts and modeled losses. These maps were available in the day
before the event hit the UK on October 27, 2013, as they were based on predicted landfall of the storm.
Which projects are you currently working on?
Besides the next phase of the windstorm
model for Europe, we are working on several
earthquake models, e.g., for the Arabian Peninsula, Greece and Cyprus and Iceland. We're
also updating our US river flood model, with
new loss data and more detailed geographical data, in particular better digital terrain
data. And we're looking at man-mad perils
too. We're also finalizing new risk models in
the Asia-Pacific region. Increasing numbers
of tropical storms have caused a growing
demand for new models. We've responded by
working on an Asia Typhoon model and several flood scenarios for major urban areas.
Aside from new models from Impact Forecasting, we're offering third party model
solutions where other companies are putting
models into ELEMENTS, our loss calculation platform. We're also looking at providing
hazard and risk data which could be tied
with your maps. This will help the underwriting part of the insurance business as they
seek to understand natural and man-made
catastrophe risk and identify locations for
underwriting new business.
ABOUT AON BENFIELD
Aon Benfield, a division of Aon plc, is the world's leading reinsurance intermediary and full-service capital advisor. Aon Benfield
helps its clients to better understand, manage and transfer risk.
They offer innovative solutions and access to all forms of global
reinsurance capital across treaty, facultative and capital markets.
As a trusted advocate, Aon Benfield delivers local reach to the
world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating
agency advisory. With more than 80 offices in 50 countries, Aon
Benfield's worldwide client base has access to the broadest portfolio of integrated capital solutions and services.
More at www.aonbenfield.com.
Chris Ewing is a geospatial professional and
catastrophe model developer with a deep
knowledge of information technology in
insurance, engineering, public and humanitarian sectors.
Contact: chris.ewing@aonbenfield.com
20 | WEBNEWS
DOWNLOADS & TIPS
GERMANS OUTPACE FINNS IN PURCHASING POWER
FOR ALCOHOLIC BEVERAGES
Kim Vahtera, Head of Commercial at GfK Geomarketing, is a
native Finn who lives in Sweden. He wrote an entertaining article
for the GfK Blog that details how Europeans' preferences for
alcoholic beverages differ from region to region.
KNOWLEDGE DELIVERED TO
YOUR INBOX: GfK GEOMARKETING E-NEWS
As a subscriber to GfK GeoMarketing
Magazine, you'll automatically receive
our monthly e-News publication.
Read his article at www.gfk-geomarketing.com/product-line-alcohol.
This gives you access to up-to-date
information on RegioGraph, digital maps,
market data and location research.
ON-THE-GO GEOMARKETING INSIGHTS
Subscribers also receive a free download
each month. Please recommend us to
your contacts.
You can access all current geomarketing white papers on our
website in the "About geomarketing" section.
Download these insights from our experts on retail, real estate
and reinsurance as free PDFs. This makes for the ideal reading
material for business trips!
www.gfk-geomarketing.com/white-papers
www.gfk-geomarketing.com/enews
IMPRESSUM
GfK GeoMarketing Magazine
edition 04 - 2014 (November 2014)
FOLLOW US ON SOCIAL MEDIA
GfK is active on various social media channels, which means you
can easily keep up with the latest news. Follow us (#GfK) on
Twitter, Facebook and LinkedIn! On those sites, you'll also find
exciting geomarketing news, such as our press releases on new
studies and our "Map of the Month", which cartographically illustrates the latest market data.
Overview at www.gfk-geomarketing.de/social-media.
Responsible for publication:
GfK GeoMarketing GmbH
Werner-von-Siemens-Str. 9
Gebäude 6508
76646 Bruchsal | Germany
T +49 7251 9295 100
F +49 7251 9295 290
www.gfk.com/geomarketing
geomarketing@gfk.com
Management Board:
Wolfram Scholz
Public relations, responsible for content:
Cornelia Lichtner
Editorial
Cornelia Lichtner, Gerrit Schreiber
Graphics & layout: Nathalie Adlung
Translation: Christopher Guider
GfK GEOMARKETING MAGAZINE 04 - 2014
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