General Insurance Article - Over one million car insurance policies cancelled last year


Continuing its track record of delivering insurance industry insights, so providers can make better decisions, LexisNexis® Risk Solutions has uncovered the scale and impact of policy cancellations on the sector. New analysis of the data from the LexisNexis® Motor Policy History contributory database - representing over 90% of the personal lines motor insurance market - has identified 1.3 million policies were cancelled in the past year, which is close to a third (32%) of all new policies written.

 Recognising the impact cancellations can have on broker business, LexisNexis Risk Solutions will be at the BIBA Conference 2019 to discuss how it is now possible for cancellations data to be used as a risk factor during the broker quoting process. This has the potential to save an insurance provider with circa 100,000 policies on their book between £125,000 and £375,000 each year[iv] - not an insignificant sum of money. This is aside from any bad debt brokers may face following a direct debit cancellation.

 LexisNexis Risk Solutions has identified:
 • 800,000 individuals had three or more cancellations in the last five years
 • 15% of new policies were cancelled in the first 1-15 days; 37% cancelled within 16-100 days and 48% cancelled within 101-364 days of opening the policy.
 • The more cancellations an individual has, the more likely they are to cancel in future
 • If an individual has a current CCJ present, there is a 64% higher risk of a policy cancellation
 • Attempts at fronting have a correlation with an individual being more than twice as likely to cancel a policy

 LexisNexis Risk Solutions has estimated that 10% - 30% of the current customers on insurance providers’ books have had a cancellation in the past and present a higher risk of future cancellation, higher claims cost and potential fraud.

 Using these powerful new insights, insurance providers can now understand both the risk of policy cancellation and the risk associated with customers who cancel their policies. This will help them identify customers with the highest and lowest cancellation rates and make price adjustments based on a clearer picture of the risk.

 Martyn Mathews, Senior Director of Motor Insurance at LexisNexis Risk Solutions, said: “Whether a cancellation occurs within the cooling off period, half way through the policy or as a result of a new business renewal, there is a cost implication for the provider, the industry at large and, ultimately, consumers.

 “For brokers in particular, often operating on slim profit margins, cancellations are a major headache. By the time a customer decides to cancel their policy, the insurance broker has incurred marketing and administration costs, as well as aggregator fees in most cases. Also, in many cases, the customer may cancel the policy and the direct debit, making it difficult for the broker to claw back any instalments owed or cancelation fees that may apply.

 “Timings of cancellations are also a big indicator of potential fraud. However, data can help to reduce this issue, because it allows the broker to establish what factors increase the probability of cancellations.

 “This new knowledge around cancellations demonstrates how contributory data from across the sector, combined with data analytics skills, can create important new insights that allow brokers to make data-driven decisions and give their customers more accurate pricing. The BIBA Conference 2019 is the perfect platform for us to showcase the power of cancellations data to the broking community.”
  

Back to Index


Similar News to this Story

Sleighing the risks by giving Santa the insurance he needs
While you might be the most magical employer in the world, we know that even you aren’t immune to the risks of running a global delivery service! From
Diversity improving in insurance and long term savings
Key figures from the Association of British Insurers’ latest Diversity, Equity and Inclusion (DEI) data collection highlight the work of insurers and
Almost a third of homeowners have been victims of burglaries
Research commissioned by Co-op Insurance reveals that almost one in three (29%) homeowners have been the victims of theft from their home. The member-

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.