By Martyn Mathews, Sr. Director of Personal Lines Insurance at LexisNexis Risk Solutions
The view insurance providers had of their customers back in 2006 was limited by the lack of and sources of shared industry-specific data. Now, insurance providers can leverage a wide range of data attributes correlated to loss costs and cancellation rates to help meet each of the six consumer outcomes the FCA suggests firms ‘strive to achieve to ensure fair treatment of their customers’ .
Products used by the motor market can now factor for an individual’s insurance history, rather than just how good they are at paying their financial commitments. But more than this, through data the industry has the opportunity to reposition itself as risk mitigators, helping make consumers whole in the event of a claim and serving them on a much more individually tailored basis.
In a world changed by the COVID-19 pandemic, Treating Customers Fairly has taken on new meaning and having a clear view of the individual’s risk at each stage of the customer journey – from quote to claim – will be key to how insurance providers meet their changing needs and expectations.
‘Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.’
This means knowing your customer, being transparent, and responsive to the customer’s needs. Utilising market-wide data on policy history rather than relying solely on the information the customer provides at point of quote, providers can deliver more accurate quotes and offer relevant additional products. For example, a new applicant has who never cancelled a motor policy in the past could be offered a discount at quote. It also helps smooth the claims journey and reduces the likelihood of claims being declined due to the policy being built upon inaccurate information.
‘Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.’
Being offered an irrelevant insurance product, or an inaccurately low initial quote only to potentially have it changed at bind, can have an irreversible impact on a consumer’s ability to trust that insurance provider. Employing accurate customer segmentation is key. This is made possible through data analysis and interrogation, coupled with the application of data enrichment at application and point of quote, pulling on market-wide contributed policy history data to provide accurate, individually tailored quotes.
‘Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.’
Once again, this comes back to knowing the customer. Merger and acquisition activity in the market has meant individuals can appear in disparate customer databases within the same insurance group. They might be listed at different addresses or even have different names due to life events or input errors.
It is therefore imperative insurance providers take advantage of linking and matching technology leveraging policy history data to help find the common threads, to bring those disparate records together in a single customer view. An insurance provider that knows the details of a customer’s wider insurance requirements, renewal dates and up-to-date contact information is much more able to carry out effective communication at all stages of the customer journey, and in-turn cross sell relevant products and the right time in the customer lifecycle.
‘Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.’
Customers generally only provide the information explicitly requested and may not appreciate the impact other details may have on the policy and premium they are currently seeking. It is far easier to provide right-first-time quotes when an insurance provider has access to a 360-degree view of the customer, policies held with other insurers, previous mid-term cancellations, gaps in cover, claims and any connected addresses or policyholders.
‘Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.’
Nothing can tarnish a customer-insurer relationship quite like a repudiated claim. And this is especially true when the claim is declined due to the customer providing inaccurate or incomplete information at point of quote and the customer either being underinsured or the policy either being invalid as a result.
It is vital that the risk is fully understood at point of quote, prior to policy inception, so that the policy provides the appropriate level of cover for the customer’s specific needs, and the price accurately reflects that customer’s individual level of risk. Contributed data from across the market can fill gaps in insurer knowledge, verify information provided, and highlight discrepancies which can then be investigated to discover whether this was mistyping, innocent human error or fraudulent behaviour.
‘Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.’
When a company knows its customers in detail, it has an instant and complete picture of them, their policies, the history and requirements. In motor this should apply to named drivers as much as the main proposer. This means insurance providers are better able to efficiently support their customers in a claim or managing a complaint. In addition, when a customer switches, the new insurance provider has access to their full insurance policy history data, gathered from across the market, helping improve the ability to deliver right-first time quotes, every time.
All in all, market-contributed policy history data and soon claims history data, combined with an increasing number of publically available data attributes correlated to insurance loss, can deliver a better understanding and a fairer service to consumers.
The more data an insurance provider has on a customer, the better-placed they are to offer appropriate cover and premiums for the risk.
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