Flood Determinations: Balancing Technology and Human Expertise to Increase Accuracy

In order to meet a lender's expected time frame for Flood Determinations and reduce production costs, flood determination providers utilize mapping geocode software to expedite the property location process and determine if the property is in an SFHA (Special Flood Hazard Area). Using geocodes allows for instant completion of determinations and a resulting instant completion rate. "Instant hit" rates range from 40% to 85% when quality geocoding is applied. Higher hit rates can be achieved, but accuracy is sacrificed, and outcomes become much more error prone.

What is a geocode?

Simply put, a geocode is a location somewhere on the globe derived from a street address's longitude and latitude coordinates.

Over-reliance on these geocodes often results in erroneous flood determinations.

Although a flood determination provider must utilize geocoding in its research process to meet the turn-time service levels expected by real estate lenders, it is critical that the provider does not "over-automate" its research process by relying too heavily on geocoding. Over-automation will lead to error-prone flood determinations.

Most everyone has experienced putting an address into their vehicle's navigation or mobile phone mapping application and then receiving a pin indicator of where the property is located (destination). This is an example of geocode technology. These applications will often route you to your destination, only for you to realize you've arrived a few feet, or perhaps hundreds of feet, from your destination. However, the human element (you, the driver), in the end, had the capacity to compensate for the "over-automation" geocode error, allowing you to locate your destination.

Companies that provide flood determinations use multiple geocode mapping resources to determine if properties are in a flood zone, but geocoding is not yet a perfect science. As mentioned above, geocodes can be off by a short or sometimes considerable distance, resulting in an inaccurate flood determination when over-automation is applied.

This type of determination also will not identify which, if any, of the structures may or may not be in an SFHA.

Using "buffer zones" in mapping software (that prevents over-automating the research process) combined with trained, experienced mapping analysts reduces the risk of inaccurate determinations. The map analyst provides the "human driver" element in the example above. Too many companies today over-automate the research process and have removed the human element and expertise of a map analyst to cut costs. A 95% "hit rate" sounds great, but a more realistic hit rate in most areas of the country might be 70% if you care about accuracy.  

Other companies are concerned with accuracy. When their mapping software, equipped with buffer zones, detects a bad geocode, the automation process halts, and a map analyst intervenes. These analysts assess whether any part of the property lies within an SFHA, determine if the structures are in the SFHA, and if flood insurance is required.

The proper combination of geocoding software with experienced map analysts will ensure determination accuracy by injecting the human element when geocoding alone can't get the job done accurately.

Every company should maximize technology to the fullest, but only to the point where accuracy is still achieved and errors are avoided. If you want a higher level of accuracy, which will give you peace of mind and reduce flood determination issues, ensuring your provider is not "over-automating" the research process makes sense.

AFR Services offers a suite of loan origination tools, loan servicing solutions, and flood insurance services tailored for financial institutions and insurance agencies. Serving our clients for more than 30 years, with an entirely-US-based Support Team, we deliver solutions and services that are unmatched in our industry. Reach out to our team today to learn more.