Reports on the rise in insurance fraud as a consequence of the cost-of-living crisis are coming thick and fast[i]. At the same time, concerns are mounting that consumers are cutting back on some insurance cover to save costs[ii].  There has never been a more important time for insurance providers to collaborate on claims data to help identify the risks of fraud at the earliest stage, and to deliver the products and accurate pricing that consumers need right now based on their individual circumstances.

Data sharing is nothing new in insurance – it automates No Claims Discount proof, it tells insurance providers the risk of policy cancellation or changes in policy behaviour as a consequence of the Covid-19 pandemic, but the latest innovation in data sharing focusing on claims history could not have been better timed or more welcomed by the market. LexisNexis® Precision Claims is transformative, providing a cross market view of both home and motor claims at each stage of the customer journey for the first time.

It stands to reason that the more you can understand an individual’s claims history – whether that’s at quote, mid-term adjustment or claim, the more you can personalise the product and premium, protect them from the temptation of fraud and ultimately go beyond their expectations at claim.

For example, if someone fails to include their full claims history in the insurance application – whether deliberately or due to poor memory – this detail could be filled in and validated based on market wide claims data avoiding the risk of the policy being made null and void at claim when non-disclosure could be discovered.

Market wide claims data may reveal a pattern of claims across multiple insurance providers. This might be a flag for fraud – or if a series of claims have occurred over a number of years for the same problem, such as an escape of water, further questions could be asked about the repair methods used to prevent another claim occurring.  Claims data can even highlight claims prior to the customer’s current tenure – uncovering a back-story that’s not just useful for insurance providers but for the customer too.

But perhaps one of the biggest benefits of claims data is its use as a predictor of risk in home insurance when motor losses have occurred, and vice versa. For example, we know from U.S. analysis[iii], that people with three or more motor claims incur home claims losses that are approximately 40% higher in cost than those without any motor claims.

Finally, we must not forget that the vast majority of people don’t make claims. They simply want a smooth quote process and to know their insurance provider will act quickly and with empathy if they do have a claim.  Market wide claims data empowers insurance professionals to deliver on these expectations and beyond.

As Ben Fletcher, Director at the Insurance Fraud Bureau, said recently[iv]: “As millions struggle because of the cost-of-living crisis, the sad reality is more people could be tempted to chance insurance fraud and face the serious consequences of having a record on the Insurance Fraud Register.”  The industry needs to continue to work together to help stem the tide of inflation induced fraud, and protect would-be fraudsters from taking a step too far. LexisNexis® Precision Claims is a vital step forward in that journey.

[i] https://www.aviva.com/newsroom/news-releases/2022/05/insurance-claims-fraud-up-by-13percent-in-2021/

[ii] https://business.yougov.com/content/42969-more-one-ten-consumers-globally-will-cut-back-insu

[iii] Based on LexisNexis Risk Solutions internal studies of U.S. personal lines claims histories

[iv] https://insurancefraudbureau.org/media-centre/news/2022/dont-chance-fraud-ifb-launches-insurance-fraud-register-ifr-awareness-campaign/

by Carla McDonald,

Director of Insurance Claims Product Management,

LexisNexis Risk Solutions, Insurance, U.K. and Ireland