Although the home insurance market enjoyed relatively healthy levels of growth and competition in pre-pandemic years, it has always lacked access to comprehensive, cross-industry claims data. This means that insurance providers may be unaware of crucial industry trends, including an increase in both the temptation and opportunity for consumers to commit fraud. In a post-pandemic market where consumers may be under high levels of financial strain this temptation could be even greater.
Cases of fraud were seen to be increasing before the Covid-19 pandemic; the volume of property insurance fraud, including fraud on home insurance policies, rose by 30% in 2019.[i] Despite the fact that lockdowns resulted in significant reductions in some forms of crime, times of economic hardship can mean individuals may be tempted to commit certain types of fraud – whether that’s not declaring a past claim in order to secure a cheaper quote or exaggerating an accidental damage claim. Insurance providers need to be one step ahead and market wide contributory claims data could be a key ally.
Recent LexisNexis Risk Solutions UK research found that the temptation to manipulate information at quote and claim is strong for a significant proportion of homeowners and renters.[ii] Two in three think it is acceptable to manipulate the information they provide when using price-comparison websites in order to get a lower quote for home insurance. Also, about half of consumers who have recently filed a claim are more likely to consider adjusting or exaggerating a future claim in order to get a larger pay out.
To fully understand fraud risk at quote and claim, home insurance providers need to understand more about prior claims made by the individual before incepting a policy or paying out a claim. Having access to claims data for the person and the property at a highly granular level will allow them to put claims into context, as well as providing insight for pricing.
The LexisNexis Risk Solutions research also found that nearly 9 in 10 consumers who had filed claims recently thought home insurance providers seek to avoid paying out on claims at least some of the time, and those who recently filed claims then seen the premiums increased are more likely to say it is acceptable to manipulate information. Not only would a market-wide contributory claims database play a very useful role in helping the market gain a holistic view of the customer at point of claim, it would provide crucial insight at all stages of the customer journey.
At acquisition stage, a granular view of claims data would allow insurers to prefill existing online quotation journeys in order to help improve accuracy and reduce customer drop off. At pricing and underwriting stages, the data could ensure that premiums cover the risk correctly. Furthermore, having this holistic view of risk would allow insurance providers to make some operational cost savings by cutting out any unnecessary manual pricing and also provide price points to help insurers differentiate themselves to the consumer.
A market-wide contributory claims database for the home insurance sector could clearly play a very useful role in helping providers deal with a range of challenges in the current market; fraud, new regulation, changes in risk created by a hybrid of home and office working, and extreme weather events to name a few. LexisNexis Precision Claims for home is going to play a key part in that, supplying data in three main categories – person claims history, property claims history, and person and property claims combined – as the basis for building a faster, more seamless quote and claims experience. Data insights at each stage of the customer journey can help the market respond to these challenges efficiently and offer a multi-dimensional understanding of risk.
Nick Wilmot, Senior Manager, Home, LexisNexis Risk Solutions UK and Ireland
[i] “Detected Insurance Fraud: New data show that every five minutes a fraudulent claim is discovered” (ABI) https://www.abi.org.uk/data-and-resources/industry-data/
[ii] LexisNexis Risk Solutions was not identified as the sponsor of this research, which was based on an online survey of 3,083 residential homeowners and renters (including 1,576 homeowners and 1,507 renters). The research was completed during 2019