By Tom Lawrie-Fussey automotive director, LexisNexis Risk Solutions, Insurance, U.K. & Ireland
Add driver-centric data to the mix based on an individual’s policy, shopping and claims history alongside public and private data sources and the result should be a comprehensive view of motor insurance risk. That ideal scenario is now within reach.
The motor insurance industry is on the cusp of a big breakthrough in bringing vehicle history, proprietary Advanced Driver Assistance Systems (ADAS) data and driver history data together that could prompt insurance providers to re-evaluate their approach to pricing and claims.
This development could not be better timed. Aside from heightened regulatory requirements for insurance providers, increasing climate risks, claims inflation and fraud, the changing profile of the U.K. car park means motor insurance risks are also changing and keeping pace will demand a deeper understanding of the vehicle.
A vehicle’s back-story such as the number of past owners and MOT history can tell insurance providers much more about the risk it presents but a lack of new ‘metal’ to the market means that cars on the road are getting older, averaging over nine years old .
Already, more than a quarter of vehicles on U.K. roads have more than 100,000 miles on the clock .
When it comes to upkeep, research suggests some owners are scrimping on MOTs and servicing due to the cost of living crisis. At the same time, on-going supply issues have resulted in used car prices shooting up .
As the Financial Conduct Authority (FCA) warns insurance providers not to undervalue vehicles when settling claims, the value of data intelligence on the true market value for a vehicle is clear.
While the U.K. car park is getting older, new cars are getting smarter with 8 in 10 newer vehicles boasting driver assistance systems. As we witness rapid development and deployment of vehicle safety technology, it is vital insurance providers understand what combination of technology is present in the vehicle and how it helps reduce risk based on real-world claims experience.
Obtaining a true picture of a vehicle starts with getting the basics right. That’s why new vehicle insights are becoming available to insurance providers on vehicle specification and status, mileage, MOT history, vehicle valuations and vehicle listings. Used alongside data on the presence and performance of ADAS fitments at the level of Vehicle Identification Number (VIN) and the risk for the vehicle really comes into view.
But the vehicle is still only one part of the picture. Already, UK motor insurance providers are using a unique contributory database containing more than 95% of the motor insurance market policy information, allowing them to understand risk related to cancellations, gaps in cover, and an individual’s No Claims Discount history.
So, it makes sense to open bring together granular data on the history data of the car, the safety features for that specific car together with policy history data for the driver/s of that vehicle so that all the data points can be viewed collectively to help insurance providers make the fastest, most accurate decisions. In essence, a one stop shop of vehicle and driver data.
Blending granular vehicle and driver data through one data platform means access to a more comprehensive picture of risk is created, rather than insurance providers having to piece together pieces of information together from multiple sources. This can slow quote and claims processes which is counter to the faster, digitised services customers want and insurance providers need to deliver.
This combination of granular data can help insurance providers price more accurately, manage risk during the lifetime of the policy and manage claims more effectively.
Motor insurance providers in the U.K. are currently testing a new solution that will do just this, in readiness for a full launch later this year. By understanding more about the metal as well as the insurance history of the driver in an instant, insurance providers are on the right path to price fairly and accurately, whilst managing claims with empathy and efficiency.
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