Articles - True Quote or Not True Quote

The ABI’s latest Home Insurance Premium Tracker recently confirmed that home insurance premiums are at an all-time low. That’s good news all round isn’t it? It points to improvements in affordability of insurance for households. However, LexisNexis Risk Solutions research has revealed that despite low premiums across the market, two in three consumers would be happy to manipulate the information they provide when requesting a home insurance quote to cut the cost of their premium further still.

 By Jay Borkakoti, Director, Home Insurance, UK and Ireland, LexisNexis Risk Solutions

 This willingness to stretch the truth in search of a lower price implies that there is still a degree of frustration about the cost of home insurance or insurance pricing in general.

 Two thirds of respondents (65%) feel it is ’somewhat’ or ‘completely’ acceptable to manipulate the information they provide to online aggregators to obtain a lower quote for their home insurance. This figure is significantly higher than the 43% of motor insurance policy holders who said the same in a previous LexisNexis Risk Solution study.

 Three in five shop every year
 Our research also found that three in five consumers shop around for home insurance at renewal. They may be encouraged to do so by their insurer’s requirement to publish last year’s premium with their new renewal quote.

 With 74% of consumers now buying their home insurance online, including 54% buying indirectly through aggregators, our study of 1,500 UK homeowners has revealed the extent of the challenge facing home insurance providers in gaining a true understanding of risk for pricing and retaining customers beyond year one in order to increase their lifetime value.

 So are consumers more comfortable manipulating data for home insurance? Lack of awareness of the risk, lack of appreciation for the value of cover, lack of trust in the sector may all have a part to play. Unlike motor, home is not always a compulsory insurance purchase and therefore manipulating data could be perceived as being less serious. The ABI data also showed that 1 in 4 households live without contents cover, which really underlines the poor perceived value of home contents insurance.

 Home in on the customer journey
 However, we believe the customer journey from application to quote and underwriting is at the heart of the issue. When arranging cover, there is an opportunity for the consumer to misstate details about themselves, the property, past claims and contents value, making it easier than it should be for data manipulation.

 In the past, we have established that some consumers feel frustrated at having to enter details into a long home insurance application and struggle to accurately answer certain questions. So operators in this market need to find a way to deliver the right cover for the risk at the right cost and in a way that is simple for customers to purchase. This is where data has a valuable role to play. The good news is that we believe we’re on the cusp of bringing some real step-changes to the type of data available to help understand risk in this sector.

 Data breaks through
 Verified customer and property data, including past claims collected from across the market related to the household, can help insurance providers to deliver more fair and accurate quotes.

 Utilising data to both prefill the application and price as part of the quote process should help to create a more holistic understanding of risk. Prefilling information also serves to smooth the customer journey, reducing drops outs whilst improving confidence in the process – for both the customer and insurance provider. Data that is known about the property is already available to help take some of the pain from home applications through reducing the number of questions and improving data accuracy.

 Add access to perils data at Point of Quote and, again, the picture of risk grows to help ensure that first quote is as accurate as possible. Flood, fire, escape of water and subsidence risk can all be understood right down to the individual’s address.

 The advances in data insights for home insurance are set to be transformational. These solutions are emerging as household compositions are changing and consumers are looking for protection that reflects shifting home ownership and home make-up. We have a whole generation of young people who might not see home ownership in their future and we could see multi-generational households becoming more common.

 The use of data insights allows providers to better understand the risk and improve the customer experience, but beyond this, it can help the market evolve their offerings to meet ever-changing consumer needs.


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