How is data helping consumers with their motor insurance claims?
Data, telematics, Internet of Things, all of these are commonly spouted buzzwords, but do they actually help the customer? Patrick Brusnahan speaks to James Burton, director of product management, LexisNexis Risk Solutions, about these innovations and what they can do
LexisNexis Risk Solutions is a technology company that claims to process 90 million transactions an hour. This makes it a firm expert on data usage and has been operating in the UK for around a decade.
In terms of the UK insurance market, it works with 90% of firms and processes 250 million transactions a day. One thing it takes particular pride in is its no claims discount database.
PB: Tell us about the no claims discount database and why it is a flagship product?
JB: The LexisNexis Motor Policy History database is our first contributory database in the UK and the LexisNexis No Claims Discount module associated to it now has participation from 94% of the market. It allows more accurate pricing and operational efficiencies through automatically verifying and validating a customer’s NCD history.
The No Claims Discount Module has set the course in the UK insurance market for the development of future contributory databases from LexisNexis Risk Solutions – allowing insurance providers to see their own data in context with the rest of the market, helping to fill important gaps in knowledge. This is vital to improving the customer experience and delivering more accurate, right first time quotes.
Contributory databases work best when they are a true partnership between the contributors and the data custodian, with the custodian leveraging its expertise to build greater value from the data. The two parties come together with the joint aim of building improved knowledge across the industry. The ideal contributory database adds value by normalising, standardising, aggregating, and linking contributed data with other information. The more a database is used, the better it becomes and the greater value it delivers to its contributors. Its value increases both from additional contributions and from the strength of the data insights from the results through improved analytics and modelling.
With access to a market-wide contributory database, the customer’s details can be verified and enriched, putting the insurance provider in a much stronger position to deliver a right-first-time quote.
When working with such a large amount of the market and such a large amount of data, how do you streamline processes? If at all? Why are insurers incapable of doing this internally?
The insurance industry is highly adept in handling and disseminating large volumes of data – it’s built on this expertise.
However, the enrichment of that data is where LexisNexis Risk Solutions brings huge value. As a data provider, trusted data custodian and data analytics expert, we know how to create insights for the sector that could not be achieved by insurance providers working in silo. Our business is focused on delivering actionable insights to the home, motor and commercial insurance markets based on market-wide consumer, business and property data.
LexisNexis Risk Solutions risk datasets can be injected at the point of quote through the Informed Quotes and Informed Broker platforms allowing insurers, brokers and MGAs access to over 40 different datasets. This data can also be accessed through all major software houses in real-time. This is evolving the risk assessment process for insurance providers across the sector, enabling them to make faster and more informed decisions while delivering a better customer experience.
It would be impossible for insurance providers and automakers to achieve the insights they need by working in isolation.
LexisNexis Risk Solutions leverages four main components to assess risk and opportunity:
Vast Data Resources – Globally, over six petabytes of content comprising billions of public and proprietary records. Over 90 million transactions processed per hour, 78 billion records held, in over 100 countries, and from 10,000 different sources;
Big Data Technology – The latest cloud based technology, enabling data processing at very high speeds;
Linking and Analytics –LexID resolves, manages and matches information to create one consolidated view of the customer with over 99.99% accuracy, and
Industry Specific Expertise and Delivery – the business has a dedicated team of data scientists focused on predictive analytics.
And what is missing that you and others do not provide yet?
It maybe not so much about what is missing – it’s about how to make data easy for the market to use. We are always looking to the future to see how data can be better leveraged to support a greater understanding of risk and to help the industry create new propositions to meet the changing demands of consumers.
How do consumers view their data being used in this context? Is it 2nd nature now? Are they less protective of data than they once were?
Independent research has shown that consumers are willing to share their data in return for more personalised products and an improved experience. Consumers have driven data innovations in this market because they want a swift application, quote and claims process with products priced fairly based on a true reflection of their risk.
Predictive data has always been used to help determine insurance risk but rather than the broad brush assumptions used in the past, the understanding of risk has become more refined using insurance specific data, which means pricing is more accurate based on the risk of the customer.
For example, it was only a matter of a few years ago that a property could be deemed a flood or fire risk because of its postcode. Now we are able to define a flood risk down to the address level building outline or a fire risk based on the building height. In motor insurance, consumers are rarely asked to prove their NCD as insurance providers have instant access to this verified data and through data analytics we can now help reduce the serious risk of named driver fraud and fronting. In home, prefill solutions reduce the time and effort applying for home insurance – something consumers told us they wanted. Finally, in telematics we know based on our research that 60% of motorists want usage based insurance.
Fundamentally, consumer interests are at the heart of every data solution to support access to insurance products that match their risk. The ability to leverage data really lies in generating and maintaining customer confidence and trust. As more and more data points become available, there is a need to get data governance, quality, standardisation and inter-connectivity right to make the right decisions.
Many firms in the sector are trying to make roads safer. Are insurance firms actually doing this in your opinion? Are customers looking at driving data/telematics and realising they need to improve?
That is a resounding ‘yes’! Our analysis shows that road casualty rates in the youngest drivers have fallen by over 35% over the past seven years, compared to 16% for all motorists. In parallel we examined the penetration of telematics insurance in this age group which has now reach 80–90% market penetration. The distinguishing difference between young drivers and their older counterparts is telematics insurance.
We believe this provides firm evidence of the role of telematics in improving road-safety amongst young drivers. It both validates the insurance sector’s significant investment in telematics and reveals the mass market potential for telematics beyond the young driver market.
If we extrapolate what we have seen in the young driver market in reduced road casualties and apply this across the whole of the population there could be 60,000 fewer casualties. That’s 60,000 fewer people visiting hospitals; 60,000 fewer lives impacted by road collisions.
Telematics insurance needs to be taken to the mass market and made available to the 9.7 million people our research suggests would be interested in purchasing a telematics policy.
However we need to build consumer trust and clarity around data use. We would like to see a Memorandum of Understanding between the ABI and ACPO. There are too many misconceptions about how telematics data is used and this MoU would go a long way to help address some of these misconceptions.
What is coming up in LexisNexis’ near future? Expansion?
Yes, certainly expansion in Europe and to our product portfolio.
2019 will also see our expansion across Europe, growing our penetration in France, Italy, Germany and Spain. This is in response to a demand from automakers who are looking to use connected car data to deliver new mobility services to customers across the region, which we will support through solutions such as our Global Telematics Exchange. At the same time we are building relationships with insurers operating across Europe to give them greater customer insights through, for example, our Global MapView perils visualisation product.