Comment & AnalysisFeatures

Demand for property calls for demands in data enrichment

By Neill Slane, senior vertical market manager, U.K. and Ireland, at LexisNexis Risk Solutions

Over the past twelve months, almost every element of the property market has seen a shift triggered by the effects of the coronavirus pandemic. Lockdown caused a delay in home moves, which then ramped up as buyers looked to take advantage of the stamp duty tax reduction. As the number of properties for sale could not meet demand, property prices rose. The stamp duty reduction also appears to have led to an increase in mortgages for UK holiday rental homes, perhaps fuelled by pandemic-led holidaying in the UK. The number of “holiday let” mortgage deals on the market has more than doubled in a year and the value of the private rental sector has grown 5.8% to £1.4trillion following the housing market boom.

What we want from our homes also appears to have changed. In a study by Market Financial Solutions, having a garden, or some form of outdoor space was the single most important factor for 92% of consumers surveyed. The importance of outdoor space also correlates with the fact that 76% of the individuals surveyed said the potential to convert or extend a property was a priority for them. 

This has  put extra pressure on home insurance providers to attain an instant view of the risk posed by particular properties, improve the application process, and provide accurate quotes and cover to customers at a time when home insurance, could be seen as a luxury rather than a necessity. Based on a report from Premium Credit, since the pandemic began, around one in twenty (5%) of those who use credit, such as credit cards or personal loans, to pay for their insurance have cancelled or amended buildings insurance over the past year because of not being able to afford all  their insurance cover, while 7% have cancelled or amended their contents insurance.

The home insurance market is also preparing for changes to pricing practices and will be under increased scrutiny to ensure they are delivering fair value customers through their insurance propositions. 

The increase in home moves and second property purchases, a change in how we use our homes as a consequence of the pandemic and the incoming pricing and product governance regulations will demand a more granular risk assessment when preparing to on-board a new policy or customer. Crucially, that needs to be achieved without impacting or adding friction to the customer experience when applying for or renewing insurance. Simply adding more questions to the home insurance application process may lead to customers ‘guestimating’ or simply dropping out because it’s just taking too much time.

Highly granular property characteristics data, now available at the point of quote, offers a much more detailed understanding of risk, going beyond the questions traditionally requested from a consumer in an insurance application – from number of bathrooms to square footage and parking space. As well as supporting pricing accuracy as part of a data enrichment strategy, when used to prepopulate questions in the application form, this data can take the onus off the customer to confirm key details about their property they might only guess at.

Home insurance providers can now use this level of data enrichment about the property alongside data on the policyholder, the location and the environmental risks, from one access point to deliver an insurance quote based on a holistic view of the risk. 

Moreover, at renewal it is important to understand any changes in how the property and consumer interact. Access to this level of data can bring a fresh perspective on the risk at renewal and help insurance providers understand product suitability to help ensure they are delivering fair value. For example, it may help identify a customer now has three bathrooms rather than two, has made space for parking in their front garden or created an additional kitchen which hadn’t been factored in the original quote. Insurance providers can now establish the facts about the property characteristics up-front for the customer to simply confirm.  This not only simplifies the quote process, it reduces the risk of underinsurance.

Thinking about those with rental properties as well as their main home, highly granular property characteristics data could also be used in commercial and SME landlord insurance, offering the potential for insurance providers to innovate and bundle landlord and home insurance together.

This ability to cross-sell and upsell is vastly improved when insurance providers link and match their customer data to create a single customer view. This would help them identify if an existing customer approaches as a new customer for a home insurance quote on a different property or even the same property. 

The demand for property has created new demands for data to improve the assessment of property risk in order to deliver accurate, competitive quotes, at speed and to differentiate home insurance propositions to attract and retain business. Over the past year our homes have been a sanctuary for some, a prison for others but we have all spent more time than perhaps we have ever done, at home. Price will remain an important factor, but some consumers may be looking for more personalised products to ensure the roof over their heads and their possessions are properly protected should the unforeseen occur.

Gaining a deeper level of risk understanding creates the opportunity to offer a more customised and relevant service. By empowering themselves with highly detailed, verified property characteristic data alongside a growing choice of datasets in the market about the customer and the location, home insurance providers can deliver more personalised quotes, cover that is appropriate for the risk and in doing so, meet their new regulatory obligations whilst also fulfilling their customer’s needs. 

Neill Slane, senior vertical market manager, U.K. and Ireland, at LexisNexis Risk Solutions

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