By Martyn Mathews, VP, personal and commercial lines, UK and Ireland for LexisNexis Risk Solutions, Insurance
Indeed, the FCA states that if insurance providers do not have sufficient information to satisfy themselves that a renewal contract is consistent with a consumer’s demands and needs, they will need to obtain and consider that additional information before proposing a renewal .
Bearing in mind too, that the Financial Ombudsman says that one of the common complaints from insurance customers is that ‘their insurer based their premium on incorrect information or otherwise made a mistake when calculating the price’, then the need for accurate, comprehensive real-time data enrichment at renewal is clear.
Fortunately, the scope and quality of data accessible to insurance providers has grown in-line with demand. A good example of this is the on-going accumulation of industry contributed motor policy data which not only automate No Claims Discount entitlement but help indicate risks associated with customers who cancel their policies or have gaps in cover.
Meanwhile, vehicle centric data enrichment solutions have advanced in line with the changing dynamics of the U.K. car parc. The majority of cars rolling off the production line now include basic Advanced Driver Assistance Systems (ADAS) features and 5% of the UK car parc features level 2 autonomy , meaning the requirement for insurance providers to incorporate ADAS features at VIN level in their decisioning has grown. Using ADAS data at renewals brings an additional element of insight for accurate pricing, allowing insurance providers to reward their customer for the investment they have made in the safety of their car.
Vehicle centric data also now extends to behavioural data on how vehicles have been maintained, highly accurate valuations data based on advertised cars for sale, MOT, mileage and ownership history – all from one source.
In a world of increasing premiums, insurance providers who use this data, demonstrating their commitment to fair, accurate pricing could also deliver just the incentive needed for a consumer to stick rather than switch. It could even mean a customer is offered a lower quote for instance if their car has done fewer miles than may have been expected for its age and has passed its MOT annually.
The use of data enrichment at renewal is not limited to the motor market. Home insurance customers are traditionally ‘stickier’ than motor customers who tend to shop around more . So, a home customer who has stayed with the same provider for years is very likely to need a complete reassessment of their cover and pricing prior to renewal. As analysts predict that clay-related subsidence will increase by a third from 2020 to 2030 and triple by 2050 , the advantage of using geospatial data is clear.
Insurance providers can use address level geospatial data intelligence to help understand perils risks such as subsidence, fire, flood, windstorms, local hazards and crime rates. Highly granular property characteristics data can also help build a more complete picture of the property risk, based for example, on the number of bathrooms, the roof type and listed status.
All of these insights will soon be complemented by industry contributed claims data so that an individual’s home and motor claims history can be viewed in combination for the first time, along with the claims history of the asset. This game-changing development will bring a further valuable layer of intelligence when assessing risk for renewals.
Finally, but perhaps most importantly, as well as accessing data from external sources it is imperative that insurance providers are fully leveraging the data available to them within their organisation. This is where linking and matching technology can create one overall view of the customer that can underpin further data enrichment. With one golden record for each customer based on all previous engagement with that individual within the business, insurance providers have the ideal starting point to calculate a fair and accurate renewal quote with the offer of a product that will be right for the customer’s needs.
As cost pressures continue to push insurance premiums up, more people may turn to shopping around despite the ban on price walking. Indeed the Association of British Insurers encourages people to shop around to get the policy that best meets their needs .
Nevertheless, since the FCA’s new rules on fair pricing came into force, the light continues to be shone on renewals. The data available to the market to assess risk and do more for the customer continues to grow rapidly. Insurance providers who keep on top of the latest data enrichment solutions will benefit from delivering fair pricing and fair outcomes for customers at renewal.
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