Right now, the need for reliable and accurate data to help insurance providers do the right thing for customers has perhaps never been greater. Financial stresses on individuals and businesses created by the pandemic means customers may approach insurance buying with a different mind-set than before.
Whether it’s mandatory insurance, such as vehicle and commercial cover or home insurance, the temptation may be to go for the cheapest, stripped back insurance policy to simply ‘tick the box’, and in doing so, unwittingly risking underinsurance. Other temptations may include manipulating the data provided in the application to get a cheaper quote, or they may choose to forego cover altogether which can have bigger ramifications.
For insurance providers there’s a tricky balance to be achieved in delivering a swift service that responds to each individual’s needs and how that might have changed as a direct outcome of the pandemic, but the balance also needs to protect the insurance provider from fraud and increased claims losses which only adds to the cost of insurance.
It all comes down to having the right data at your fingertips at the right time. The more data-led insights you have, the more accurate the risk assessment and subsequent pricing decision about the risk is. Sounds simple in theory but in practice as the data sources available to the market have grown so too has the challenge of bringing all that data directly into the quotation process to create a 360 degree view of the customer. It stands to reason that the more data providers have to call out for, the slower the process becomes, and more frustrating this is for both the insurance provider and the consumer.
Being slow is not an option in the modern e-traded insurance space. It creates a poor experience for the customer, leaves the door open for more agile competitors, and ultimately is not an efficient way of working.
Consider for example residential and commercial property insurance where insurance providers need to gain a complete view of the property, the neighbourhood in which it sits, the perils such as flood and fire, the people in the property and the history of past claims related to that property. That is a lot of variables to consider and making that process slicker has not been without its challenges, due to the vast and increasing range of data the sector needs to understand and assess the risks fully.
The issue of how insurance providers can get all the data they need from just one place has now been conquered through the LexisNexis® Informed Quotes platform. High volume, real-time risk data is being delivered direct into insurance quoting systems used by both personal and commercial lines providers to help inform their pricing and underwriting decisions. This includes no claims discount data, perils data, public records data, credit and identity verification information, property characteristics, motor policy history and business data all from one single point of entry. This means there’s no need for call outs to multiple providers, no unnecessary delays for the insurance provider or the consumer and all with promise of being able to deliver pricing that is truly reflective of the policies risk.
It is clear to see how this streamlined approach is benefiting the market, for example car and van insurance providers, can now understand the risk of a customer in an instant, reducing the chances of inaccurate information being used for a quote which could leave the customer exposed in a claim.
Underlining the value of this data flow direct into quotation systems, in a study conducted well before COVID-19 was in our daily vocabulary, 40% of consumers said they thought it was acceptable to use the same no claims discount/bonus on multiple vehicles. And, 17% thought it was fine to change information regarding their occupation or age on a car insurance application to lower the cost of the premium (35% of 18-34s are most likely to try this tactic).
The data flow is already growing and evolving with new insights around motor insurance cancellations and gaps in cover, as a direct consequence of the pandemic, expected to be accessible by the end of the year. This gives valuable context for the actions people have taken during these challenging times. In addition, access to industry-wide contributed claims data for home and motor, are on course for 2021, building even more detail around the risk of the individual and again that all-important context needed in respect of past claims.
By using one access point into the widest array of rating factors currently available, insurance providers can realise greater efficiencies, improved decision-making and provide an enhanced customer experience.
Being better informed means making the right call for customers at every stage of the journey.
By James Burton, director of Product Management, LexisNexis Risk Solutions, UK & Ireland