Martyn Mathews, Sr Director, Personal Lines, LexisNexis Risk Solutions takes a look at the challenges ahead for the UK insurance sector.
Signs suggest a ‘perfect storm’ could be on the way for the insurance sector. Aside from how customer behaviours and expectations may have changed due to the consequences of the COVID-19 pandemic, insurance providers face the possibility of new and multiple threats. These include extreme weather (floods have already hit parts of the UK), more lockdowns across the country, a fallout from the continued financial pressures facing households and a rising risk of claims fraud.
The value of comprehensive, timely and accurate, insurance-specific data insights to help deliver an improved customer experience, not just at point of quote but through the lifetime of the policy and to also reduce the market’s exposure to fraud cannot be overstated. Fundamental to this is ensuring insurance providers have the best possible, consolidated view of the customer.
Single Customer View
Mergers and acquisitions over the past few years mean one customer could be on several different databases or admin systems, maybe at several different addresses, or possibly under different versions of their name. Linking and matching all these records up to create a single customer view is a pain-point that now has a remedy through innovations in data processing technology – allowing insurance providers to unlock valuable data they already hold for more effective marketing, more accurate pricing and underwriting and speedier claims resolution.
Factoring for COVID-19
From a personal motor perspective, there have been concerns over an increase in named driver fraud, and with household budgets stretched, cancellations could also increase. The industry already has access to tools to understand the risks more clearly using policy history and quote behaviour data. Crucially they will also soon be able to identify any changes in insurance cover that could be as a direct result of COVID-19 such as cancellations and gaps in cover. These new attributes will provide much greater insight to insurance providers to help support customers during these difficult times.
Rating for ADAS
The pandemic has also aided consumer interest in UBI, underlining the value of data from and about the vehicle to help deliver fairer pricing. For a long time the market has wanted greater insight into the ADAS features on vehicles at point of quote to understand not just the safety of the vehicle but also the potential claims cost – now that data is being tested by the market.
Risks change with shift to WFH
In household, insurance providers need to factor for the shift to home working and higher levels of home occupancy (including lockdown puppy purchases) even with kids back at school. Insurance providers are under pressure to understand these new risks. Taking advantage of streamlined access to the widest range of data at point of quote to build a full view of the customer, including the perils risks for their individual property is vital. Of course, as the risk dynamic changes, the data the market uses to assess risk may also need to change and that’s certainly a focus for us as data and analytics provider to the sector.
Preparing for extreme weather
Data visualisation also has a valuable role to play, helping to identify householders at risk and immediately understand exposures in an extreme weather event, using near real-time data. With the threat of further local lockdowns which could hinder access by loss adjusters and repair professionals, the focus will be on understanding and trying to mitigate risks as far as possible. Knowing precisely which properties have been impacted means genuine claims can be expedited and the information can help reduce exposure to claims fraud.
Finally, as finances come under pressure and the need for the market to deliver the fairest quote based on the most complete picture of risk, at speed, has heightened, the next steps are being taken to build a clearer view of the customer using industry contributed claims data. First in home, the application of this data at quote and claim, giving the market greater context to make the fairest decisions for the customer.
Tough times are ahead for many households but the increasingly rich data insights available will help the market deliver more personalised pricing and a smoother experience at quote, renewal, MTA and claim.