In this piece Richard Toomey, senior manager, commercial insurance and Neill Slane, senior vertical market manager, U.K. and Ireland, at LexisNexis Risk Solutions, offer some insights into the value of holistic mapping data for insurers and brokers.
Home and commercial property insurance providers are facing a testing mix of challenges that will demand new levels of insight around risk as we head into 2022. It’s not just about pricing accurately at new business and renewal – although clearly that is a priority, particularly with the forthcoming pricing rules for the home insurance market – they also need to find ways to mitigate losses associated with the increasing risks of extreme weather events caused by climate change.
A World Meteorological Organisation reporti in September stated that COVID-19 did not slow the relentless advance of climate change, and rising global temperatures are fuelling devastating extreme weather throughout the world.
Along with factoring for risks associated with climate change, insurance providers will also need to demonstrate they are delivering fair value to customers, ensuring the cover is right for the risk and the claims experience surpasses expectation – regardless of what our weather has in store. This will be heavily dependent on the data used to assess the risk both at quote, during the policy lifetime and at renewal.
The growing volume of geospatial data intelligence and property specific data is set to play a key role in enabling the market to determine product suitability, price competitively and can even help prepare customers for weather events.
In home insurance, highly granular property characteristics data from LexisNexis® Property Insights, now available at Point of Quote or to prepopulate home insurance applications through our relationship with Outra the predictive data science business, can reduce the risk of underinsurance, enable insurance providers to identify the most suitable cover and speed the delivery of accurate and competitive quotes.
Insurance providers can identify a flat roofed, two bed townhouse with one bathroom and no parking sold in the last two years for £535,000 with a rebuild value of £150,000 versus a listed building with three bathrooms, two kitchens and three reception rooms currently on the market for £875,000 with a rebuild value of £425,000.
Bring in geospatial data intelligence on the risk of flood, subsidence, fire plus data on local crime rates and it’s possible to create a much more holistic view of the risk right down to a single address, almost in real-time. Soon, past claims data related to the property and the policyholder will add an extra layer of understanding of the risk to help inform both product and pricing decisions and support a smooth claims experience.
The key to this swift risk assessment is the single access point offered by the LexisNexis® Informed Quotes platform, to a highly comprehensive range of public and proprietary datasets to help inform quoting and underwriting decisions for home insurance providers.
Going to the next level, we all know that an image can speak louder than words so when geospatial data is mapped using data visualisation tools such as LexisNexis® Map View, the ability to understand risk and act on it is vastly improved. This tool is designed so that insurance providers can quickly and easily see the predicted risk from an environmental event in the future, a known risk on the very near horizon, or one that has just occurred.
Policy, claims and even quote data can be uploaded so that the impact of a theoretical or live event can be visualised for a whole book of business, a geographical region, a postcode, an address or a single property outline, pulling on a wide range of data including live feeds from the Environment Agency. The benefits are obvious – by visualising an approaching storm in this way, insurance providers can gain a clear understanding of which policyholders could be impacted and plan resources accordingly. It also gives them precious time to warn those that could be affected, to help limit the extent of loss.
This type of insight is possible at any time of day or night, giving insurance providers an instant picture of their exposures or indeed where underwriting capacity could be increased. It can also help limit exposure to fraud. Knowing precisely which businesses and homes have been impacted can help expedite claims for the genuine customer while quickly flagging those just looking to make a fast buck.
As well as upcoming storms, it is possible to visualise areas currently experiencing a flood event or calculate how fire might spread from building to building in an urban location. This enables the Estimated Maximum Loss and Potential Maximum Loss to be calculated based on ‘live’ data. This highly accurate data can even help reduce the Insurer’s reinsurance exposure.
Geospatial data visualisation through LexisNexis® Map View and data enrichment solutions such as LexisNexis® Property Insights can help insurance providers understand and manage the increased risks associated with our changing climate today and indeed going into the future. In fact, LexisNexis Risk Solutions can offer access to data to identify the climate change exposure to flood and coastal erosion in 25, 50 or even 100 years’ time. Ultimately, insurance providers can assess location and property risks based on live data, price with pinpoint accuracy, manage their portfolio and take immediate action to limit their losses and the impacts to customers in an extreme weather event.