Today your Insurance Editor had an education in how powerful data analytics truly is in the modern digital era. People talk about transformation in the UK insurance sector but it isn’t until you see a series of historical flood events overlaid upon a map, the exact footprint of buildings, plus fires recorded in flats or HMOs, all cross-referenced with your exact policy business book, that you understand how data has changed everything.
I’m talking about Map View, the market-leading property insurance perils visualisation tool, from LexisNexis Risk Solutions, which is taking the understanding of property risk to a deeper level. That isn’t just PR spin by the way, I’ve had a demo session today where the software has identified a filled-in pond in a field next to my parents house, which floods almost every winter. Now that really is detail.
How does it work? Map View is now able to provide risk scores based on building outlines and provide historical flood data as well as real-time flood alerts via a direct link to environment agencies. So let’s say Storm Norman was due to make landfall in North Wales this November; you could track the path of the storm according to Met Office data, then overlay your business book by coastal town, or properties with a history of flooding. Then you can search for surface water flood risk, street by street, exporting that data as an Excel spreadsheet and emailing it to your claims dept so they pre-warned if the worst happens.
MORE DATA, MORE SEGMENTATION
The new enhancements to Map View have come as the property insurance market faces upward pricing pressures in 2018 and as insurance providers demand a greater understanding of risk. Recent research by LexisNexis Risk Solutions found that 19% of commercial property insurers are not using any form of data and analytics to support their business, despite 86% saying they believe that data and analytics will be transformative. Furthermore, 78% said that better understanding and managing the risk profile of their book was a key focus for their organisation.
Map View’s new building outline risk scores will allow insurance providers to gain a deeper understanding of perils risk such as subsidence, contaminated land, fire and flood and where this may differ from the back of the property to the front. Using building footprints as opposed to address location identifies an additional 400,000 properties which are at potential risk of flooding.
Risk scores based on building outlines are particularly valuable in instances where one address may cover a large area such as a factory or industrial site and will factor in the risk of fire spread between buildings. One thing we learned in the demo was how a multi-layer approach to data research helps insurers and underwriters really narrow down the risk, which in turn, affects pricing of course.
So a street with new HMO dwellings, a mix of takeaways and student accomodation, maybe a tyre depot down the road, can all be referenced against local flood and fire records, plus the physical proximity of the buildings – which obviously helps understand the risk of fire spreading.
Wait there’s more. Then you can check your entire policy book by postcode, add it up in overall value, segment it by landlord insurance, contents, claims history etc. and then layer that on top of the data you already have regarding flood and fire. Brilliant.
WINTER IS COMING, AND SO ARE FLOODS
In addition to this significant enhancement, insurance providers can now overlay historical flood data sourced direct from the Environment Agency, dating back to 1946, showing the maximum extent of all individual Recorded Flood Outlines in England.
The direct link to environment agencies also provides real-time flood alerts updated every 15 minutes. This will help insurance providers to be proactive when managing their portfolio with the opportunity to alert local brokers and customers. The alert will show the specific location of a flood as well as any potential exposure when there is a severe weather warning.
Jonathan Guard, Director, Commercial Markets, LexisNexis Risk Solutions, UK and Ireland, commented, “Map View has led the market in providing perils risk scores based on individual addresses. However, as risk can vary across a plot of land and can be based on the proximity of buildings to one another, we have taken Map View to the next stage of development with perils data based on the building outline. Not only is this fairer for the customer, ensuring they purchase the appropriate level of cover at the right price, but it also can improve quotability for the insurance provider.
“Map View has changed the understanding of risk in property insurance and these latest advances will enable insurance providers to gain a far greater understanding of the risks they underwrite. The addition of historical flood data and flood alerts will put insurance providers on the front foot when managing flood claims, helping them to support their customers and reduce their claims costs. ”