By James Burton, managing director UK and Ireland, LexisNexis Risk Solutions
So how can data help to make insurance more affordable and a product consumers value? It comes down to using granular, real-time data enrichment to understand both the customer and their asset in a very holistic way and to help customers mitigate their own risks. In this way the market can prioritise access to affordable insurance protection for all.
Driving affordability with data
Working towards insurance for all is actually a two-way street. It benefits customers, who are less likely to be without insurance if the worst happens, at the same time the insurance industry can benefit, as the net for potential customers is widened.
Understanding future threats is fundamental to helping more people get better insurance protection and data-driven technology is essential to this. As data enrichment advances, it becomes ever more possible to segment the market, offering a more personalised approach to insurance provision that can help support affordability.
Examples include asking a homeowner with a history of escape of water claims to install sensors in their house which can detect water leaks to minimise potential damage caused to their home. This could result in a lower premium. Data can also help determine the best payment option for the premium based on the customer’s individual financial circumstances.
Knowing the asset, not just the person
Empowering insurance providers with swift, accurate environmental data is more important than ever as climate-induced perils increase. Knowing, for example as flash floods are predicted, that a property has a basement, means that insurance providers can warn their customer, giving them precious time to get people and possessions out of harm’s way and mitigating damage.
Insurance professionals can also exploit property characteristics data and environmental data down to the individual address to price more accurately and fairly. For example, a river prone to flooding could be nearby but a proposer’s property has actually never flooded based on historical claims data. The insurance provider may want to take a more balanced view of the risk based on this additional insight from industry-contributed claims data.
A single postcode may comprise 15 homes but three have basements and four have flat roofs. This is where address-level data can help to ensure the customer is priced for their property’s risk rather than their neighbour’s. It can also be used to highlight a policy more suited to a policyholder’s needs.
Meanwhile, a driver with advanced driver assistance systems (ADAS) features in their car could find their premium reduced thanks to the use of vehicle-centric data enrichment solutions such as LexisNexis® Vehicle Build. We know some insurance providers are offering discounts for drivers with ADAS, based on data insights such as this.
Access to information on how well a driver cares for their vehicle can lead to lower premiums for consumers too. Knowing real-time information on a vehicle’s status, mileage, value and history, including how well it’s been maintained will all affect cover. A motor customer with a full-service history and no MOT advisories could be rewarded with a premium discount.
Using data in this way to find solutions to make cover more affordable and appropriate, can only help improve customer satisfaction and encourage loyalty.
Painting the whole picture
Common-sense dictates that to help insurance customers achieve the best overall value from their insurance policies, providers must have access to the whole story of that customer. All too often though, existing customer data held by an insurance provider is siloed in different departments with no link being made between customer records.
To resolve this problem, insurance providers are now adopting the use of proprietary linking technology to match disparate identity information and create a single customer view from multiple datasets and touchpoints. By supplementing the information already held on customers with more data points to better understand an individual's risk, the most accurate picture of a customer’s needs and preferences can be achieved.
Fostering trust
The Joseph Rowntree Foundation reported that in October 2023, 2.8 million of the poorest fifth of households (47%) were in arrears with their household bills or behind on scheduled lending repayments, so the need to help struggling consumers attain security and stability in their lives is pressing.
Leveraging data for good can help ensure fairness and accessibility for all consumers. This also fosters trust and confidence in the insurance industry as a whole. Overall, using data responsibly and ethically to tailor insurance products and services can play a crucial role in promoting financial inclusion and ensuring that all consumers receive the support and protection they deserve.
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