The amount of data available to the insurance market to assess risk is growing at a rapid rate. This is
perhaps most marked in the personal lines motor insurance market where new and powerful vehicle
data is starting to feed directly into the quote process, side-by-side with the existing data sources used
by the market.
Gone are the days when the customer had to be relied upon to confirm their No Claims Discount then
post or email a document proving it, or take an educated guess at their annual mileage, or confirm the
approximate value of their vehicle. Through the power of big data and analytics, today the market has
highly accurate vehicle data at its fingertips to smooth the customer journey and improve pricing
Access to near real-time vehicle data such as valuation and insights related to MOT history are now
coming directly into the quote and renewal process. Complementing existing public and private data
sources pertaining to the individual, this data is designed to give the market a more complete
understanding of risk at point of quote whilst supporting vehicle validity checks.
Big data from classified car ads is now being used to produce a vehicle value that is a better indication of
its worth on today’s market. By combining multiple data sources, new vehicle data insights around
MOTs and keeper details are emerging designed to empower insurance providers at the point of quote.
This all helps validate information supplied by the applicant whilst offering the potential to reduce the
level of detail they may need to provide.
This is just the start of the acceleration of vehicle centric data for insurance. The capabilities of cars have
changed beyond recognition in the past 20 years as car manufacturers have invested heavily in making
their vehicles safer and more pleasurable to drive.
Where once braking relied purely on the actions and alertness of the driver, now, over 70% of new cars
in the UK have Automatic Emergency Braking (AEB) as standard and over 83% have a self-activating
system 1 . In the 5-year period between 2015 and 2020, the global Advanced Driver Assistance Systems
(ADAS) market doubled in size and is expected to reach nearly 32bn US dollars by 2023.
However, insurance providers can only rate for ADAS at the point of quote if they know exactly how the
car is equipped and this is based on the Vehicle Identification Number (VIN) Level. Just knowing ADAS is
present in the vehicle is not enough – they need to understand the intended purpose of each feature
and how they work to help prevent collisions so that they can use that to influence underwriting and
better pricing for consumers.
As each car manufacturer tends to describe their ADAS differently, deciphering the precise specification
on a new vehicle is very complex with a variety of standard and optional features that will include ADAS.
To help solve this issue, an ADAS classification system has been created, using machine learning to
logically sequence and classify vehicle safety features and the component’s intended operation or purpose.
With this foundation, we are building the intelligence the insurance market needs to accurately
factor for ADAS in pricing, delivered through a new data solution – LexisNexis® Vehicle Build.
Over two-and-a half million vehicles have been assessed across Europe, helping to establish the
differences in risk profile associated with the vehicles that have these safety features. Ultimately, it
means that for the first time, confirmation of the safety features of a car, along with how well they
perform will be accessible to insurance providers at a Vehicle Identification Number (VIN) level for
insurance quotes and renewals.
In addition to the ‘static’ vehicle build information, the foundations have been created for dynamic data
from a connected car to be fed into the insurance market, with the customer’s consent, for use in
insurance pricing and claims. This means consumers will have the choice of accessing more accurate,
appropriate and personalised insurance cover (Usage-Based Insurance), based on the precise features
and options fitted to their vehicle and their own individual driving behaviour.
Making this static and dynamic vehicle centric data ‘work’ in insurance will be reliant on a central data
exchange connecting the insurance and car manufacturing markets. Here the data can be normalised
and managed in a fully compliant way and will make the huge volume of connected car data meaningful
and useable for insurance and other services. Connected car data exchanges have now been established
in Europe and the U.S. by LexisNexis Risk Solutions for this precise purpose.
Vehicle centric in insurance is accelerating. Where age, occupation and address are currently key rating
factors for the motor insurance market, vehicle centric data is starting to give a much more rounded
view of the risk and may, in time reduce the emphasis on the factors over which consumers have no or
very little control.
By Carla McDonald, senior manager of motor insurance for the UK and Ireland at LexisNexis Risk Solutions