By Dan Cicchetti, senior director of client engagement, Insurance U.K.&I, LexisNexis Risk Solutions
In continuing to provide essential cover, the insurance industry is displaying impressive levels of agility and adaptation. Externally, regulatory pressures from industry bodies like the Financial Conduct Authority (FCA) are increasing the need for compliance. Claims inflation continues to be a major issue as rising labour costs, materials inflation, and more complex vehicle technology are pushing up repair bills. Extreme weather events are also resulting in major losses for the market.
While the pace of change may appear daunting, data can be used for good to make sense of these complex scenarios and help navigate an ever-changing environment.
By harnessing next-generation artificial intelligence and high-performing predictive analytics, it is possible to help insurance providers make better decisions, faster for their customers, enabling everything from advanced driver assistance systems (ADAS), prior claims and policy history to perils risks and public records data to be integrated into insurer workflows. In essence, data and analytics are helping insurers to create fairer, more targeted premium pricing and find opportunities to create more personalised propositions.
In motor insurance, for example, insurance providers are now gaining a far more granular understanding of a specific vehicle to support fairer pricing decisions. In fact, insurers who write nearly half the personal lines policies in the UK are using ADAS data from LexisNexis Risk Solutions today to help calculate premiums based on the actual fitment of a vehicle, while considering claims frequency and cost.
As environmental risks accelerate, insurance providers are evolving their approach to assessing property risks. Geospatial intelligence data, including real-time environmental data at individual address level, is rapidly becoming an essential tool as the market adapts. Used at point of quote and visualised in map form, it is helping insurance providers price, manage and prevent climate-driven risks like wildfires and subsidence, with a greater degree of precision. This is particularly valuable for a risk like subsidence, which is so sensitive to both climate conditions and to local soils.
Data technology is enabling another critical shift in the industry: a rethinking of the customer experience. Today’s consumers expect a seamless customer experience. If anything is clunky or slows down that consumer experience, the consumer may very well move elsewhere. By injecting data directly into the quote process, the average consumer can get a fast, fair and accurate quote online in a matter of minutes.
But perhaps the biggest change that’s come about as a result of climate change and claims inflation is the new relationship being established between insurance providers and their customers, one in which the consumer is an active partner in managing risk. With better data at their fingertips, consumers can take steps to reduce their risk, whether that means preparing for flash floods if they live in a basement property or choosing a car that’s safer to drive.
Using the power of data, insurance is about far more than numbers. Insurance providers get to use the best of today’s technology to protect people and the things that matter most to them.
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