by Martyn Mathews, VP, personal and commercial lines, UK and Ireland for LexisNexis Risk Solutions, Insurance

Regulatory changes in the insurance market are driving a demand for enhanced levels of insights about customers and prospects, to meet and exceed the expectations of the FCA and the consumers the industry serves. Anticipating this demand, along with a wider increase in appetite for data from the market, there have been significant innovations in data enrichment solutions over the past few years, for insurance providers large and small.

We first saw an increased hunger for data when the pricing reforms were introduced. It has become vital for insurance providers to unlock the power of the customer data they already hold to help ensure pricing accuracy. As such, the demand continues to grow for insurance-specific data matching and linking solutions to create the single customer view.

Insurance providers who have already used these solutions to consolidate all the customer data they currently hold can now create one true and accurate record for each customer on their books.

With this consolidated record as a starting point, they can apply data enrichment to build that picture out even further to create a holistic view of the individual and their car, their home, or both. Ultimately, this puts them in a far better position to price them accurately and ensure the product is right for the risk.

The Consumer Duty now requires insurance providers to ensure that products and services meet the needs of the policyholder, and that products and services provide fair value with a reasonable relationship between the price consumers pay and the benefits they receive[i]. Key to this, as stated by the CII’s Director of Policy and Public Affairs[ii] is ‘assuring consumers that their risks are assessed individually rather than being based on generic assumptions’.

Appreciating that most customers want a swift and seamless quote process, it is only by enriching customer data that this more personalised approach to pricing and payment options can become possible. In this way, insurance providers can keep pace with the changing nature of risk without the need for more customer-provided information.

For example, the market-wide view of claims for a person or asset such as the family car or home to be delivered by LexisNexis® Precision Claims in 2024, can help insurance providers to understand climate-related risk at a property. With this knowledge, different products could be offered to the individual to help mitigate or reduce the risk of a home claim in the future.

Insurance providers can also predict the likelihood of a future home claim based partly on the individual’s motor claims history. In U.S. analysis we found 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[iii].

In motor insurance, granular vehicle data, down to Vehicle Identification Number (VIN) level, now allows risk to be assessed on the presence and performance of Advanced Driver Assistance Systems (ADAS) and our latest innovation, LexisNexis® Vehicle Insights, offers a true picture of the history and value of every vehicle in the U.K. car parc.

Generic assumptions about risk can be largely consigned to the past thanks to the choice of insurance specific data enrichment solutions now available to the market.

It is true that data can help achieve regulatory compliance, but it also helps insurance providers gain an understanding the life-time value of the customer across all lines of business.  The key is to make data insightful, actionable and easy to ingest at each point of the customer journey. That is our core focus at LexisNexis Risk Solutions. We’re here to give insurance providers the information they need to do more for their customers. If you have a data question, please challenge us to answer it.

[i] https://www.fca.org.uk/publication/correspondence/consumer-duty-letter-general-insurance-pure-protection-firms.pdf

[ii] https://www.cii.co.uk/news-insight/news/articles/cii-survey-shows-if-insurers-meet-fca-s-requirements/102187

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

Content provided by LexisNexis Risk Solutions.