Rising claims costs in home and motor insurance, as well as the impact this is having on pricing, continues to put further pressure on the insurance market to gain a deeper understanding of risk at the point of quote. New contributory claims data offering a single version of truth for an individual’s claims history across home and motor, as well as the claims history for the asset (such as the home or vehicle) is set to take risk assessment to a whole new level in the personal lines market.
LexisNexis® Precision Claims will provide a cross market view of both motor and home claims at the point of quote for the first time, drilling down to level of granularity that has not been possible before, such as the type of claim, the circumstances including who was at fault, and the settlement cost.
This comprehensive view of the applicant’s personal lines claims history from one source will uncover new insights to support pricing accuracy and fairness, smoothing the quote and claims journey as well as raising red flags for fraud. In essence, it will leave little room for guesswork about the market’s claim experience with an individual and the relative risk and cost of a future claim.
One of the reasons why a cross market view is so important is the correlation between home and motor claims. Data gathered from our U.S. business demonstrates that if an individual has three or more motor claims, the cost of their home claims could be up to 40% higher. Knowing that a motor loss can be predictive of a home loss and vice versa[i], insurance providers will be empowered to better predict claims losses based on the individual’s complete claims history.
From a Consumer Duty perspective, the more context an insurance provider has on the past claims history of an individual or asset, the better they can fulfill their responsibilities. With a detailed understanding of the applicant’s claims history, insurance providers will have a greater understanding of their needs, helping to ensure that the products they are selling match those needs. They will also be in a far more informed position to offer ancillary services to help mitigate known risks.
Of course, while the key benefit is to support fair pricing for the customer and help improve loss ratios for insurance providers – indeed, greater granularity and context might even provide the justification needed to offer a premium discount – Precision Claims will also offer huge value in identifying fraud. Rather than simply validating past claims based on customer declarations, insurance providers will be able to gain much greater context for those claims and understand where possible patterns are emerging.
The power of cross market claims data to help oust fraud is obvious, but the superpower of claims data to help segment insurance customers, to deliver more personalised, appropriate quotes and the outcome they need at claim, cannot be overstated.
[i] Based on LexisNexis Risk Solutions internal studies of U.S. personal lines claims histories
Content provided by Samantha Marsh, director, product management, UK & Ireland, LexisNexis Risk Solutions, Insurance
