Articles - Society needs insurance the time is now to use data for good

Society needs insurance but as inflation hits 10.9 % for the poorest tenth of households across the U.K., pay packets are shrinking and the prospect of coping with £4.000 energy bills from January looms. With such a concerning economic outlook, paying for insurance may feel like a luxury for some. Already one in five insurance professionals report that consumers are reducing the amount of cover they purchase to try to minimise their costs.

 By Martyn Mathews, VP market planning, LexisNexis Risk Solutions, Insurance, UK and Ireland

 Meanwhile, 18% say a growing number of policies are being allowed to lapse, meaning some consumers no longer have the financial safety net of an insurance policy. Unexpected and costly events pay no heed to a cost-of-living crisis. Without wishing to preach to the converted, educating consumers on the protection and security provided by insurance is more important than ever.

 The industry has worked hard to make policies more accessible and competitive and help ensure consumers stay covered in their hour of need. Now is the time to truly leverage data analytics to segment the market and provide a more personalised approach based on an accurate picture of that individual customer’s needs and preferences.

 Fundamentally, insurance providers need to look at data not just to price accurately or manage a claim, but to do more for the customer based on that knowledge. It might be tips to help them reduce the chances of a claim for their flat roof; flagging an alternative policy that maybe more appropriate for their home and possibly cheaper; or even offering a discount even though they may have lost their No Claims Discount through a non-fault accident because they are actually a good driver based on their claims history. Customers want hope when the world may look bleak. Feeling valued and getting more than they expected from an insurance provider can tick that box, and more.

 Insurance providers stand the best chance of offering more personalised products if they can attain a single customer view – essentially an amalgam of all the information they already hold on that customer in whatever silo it is currently stored – claims, marketing, pricing. As an example, at renewal an insurance provider that knows Mrs. Brown moved house, changed cars and added a teenage son as a named driver to their policy in the last three months and had a subsequent insurance claim, might take a more personalised approach to the pricing and cover letter. Insurance can help alleviate a person’s stress rather than add to it. The single customer view using linking and matching technology gives insurance providers that power.

 Enabling U.K. consumers to get more competitive pricing is done by infusing data into insurance provider workflows. Prior claims and policy data, vehicle information, geospatial data, property information and public records data can all be fed into the insurance lifecycle across the motor, home and commercial insurance sectors. Of course, there is a careful balancing act to play, injecting vast reams of data into the policy process should create opportunities to improve customer service vs putting it at risk. Data must always add value to the customer and insurance professional alike, speeding up the onboarding process or claim and never detracting from it.

 In pricing, the more variables used in a premium calculation, such as vehicle Advanced Driver Assistance Systems (ADAS) features, or highly granular claims data for home and motor, the less chance one single variable will impact an insurance premium, helping to provide a more personalised, much fairer quote. It also puts insurance providers in a position of being a trusted advisor, guiding a consumer if their home is at flood risk, for example.

 This is data’s time to shine. As we navigate one of the toughest economic times in decades, we must remember that the increasing ease with which data can be collected, stored, assimilated and shared can help insurance professionals get the best rate for their customer, no matter who they are. In turn, their ability to afford a policy based on a fair segmentation process will offer them the financial protection they need.

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