Around half of UK home insurers currently find value in data enrichment and the principles of contributory data. Interest in data enrichment has been increasing and insurers overall agree that increased emphasis on data security, on data in the claims space, as well as use of data to understand behavioural risk of individuals, will contribute to the increasing value of data enrichment.
These were some of the findings from our LexisNexis Risk Solutions Home Insurers Study*, surveying 77 leading insurers on their attitudes to current and future potential data sources.
Data enrichment provides both insurers and brokers with an opportunity to leverage the vast amount of information they have in their own systems and combine it with external data sources to grow new business and enable them to more accurately assess and price risk at the point of quote to drive profitability.
Whereas insurers in the past had to rely on their own internal risk score and information provided by the customer in the application process, competing to win in insurance relies on being able to access the wealth of public data and individual-specific data out there. Both insurers of all sizes and brokers, are facing their own types of analytics and technology challenges.
Our home insurance survey found there’s interest in a more holistic approach to risk, bringing more claims data as well as more data on individuals in the house.
In general, insurers who are already taking advantage of a broad number of data sets are more likely to be positive about data enrichment, compared to smaller insurers and brokers who are less likely to be users of certain data.
Home insurers are nearly equally split in terms of whether or not they currently use motor loss history when underwriting home insurance. Just under half told us they see value in motor loss history in home insurance underwriting, as well as a holistic view of all claims.
Familiarity with data breeds awareness
The vast majority of home insurers use public records/credit data on an individual in quoting and underwriting. Familiarity breeds awareness and so the most commonly-used types of information are also seen as the most valuable, with credit being the top type of information in this regard.
Credit, custom insurance risk scores, and past bankruptcies are the most valuable types of information about an individual/homeowner for pricing at point of quote.
Use of data on other home occupants is less widely used amongst insurers, and credit is the primary type of information used: only about one-third of home Insurers use public records data on other home occupants.
Value of location-based data
Our research also showed there is some opportunity for a location-based data enrichment offering, for example overlaying aspects of the home insurance business – such as patterns of claims, cancellations, quoting or other activity, and not just underwriting – onto LexisNexis Map View.
Essentially all the home insurers surveyed said they use some type of location-based data in quoting and underwriting. However, the type of data used is quite varied due to the common challenges of ingesting data from many different sources, rather than through a common platform. No single type of location-based data is used by more than half of home insurance providers.
But despite variations in the use of this data set, home insurers have positive value perceptions. Perceived value is nearly as strong among non-users as it is among users of a type of data.
Therefore, the opportunity appears to exist to boost home insurance access to various types of location-based data through a single point of access.
Fire and flood data are key elements of the data most insurers want to access. Crime, theft and flood resilience data are also valuable and are not widely used by home insurers. Approximately half of insurers expressed a willingness to contribute to a shared database of flood resilience building features and repairs, at the individual property level, which is high considering discussion of this concept is still only in the early stages.
Value of claims history data
Past policy data is the most widely used, by 83% of home insurers, with most insurers saying it holds considerable value: ‘extremely valuable’ for 26% of home insurance providers, ‘very valuable’ for 35% and ‘somewhat valuable’ for 25% of them.
However not withstanding some perceived gaps with the current sources of claims data overall, claims data is considered to have the strongest value perceptions for the future.
Given the interest we have already seen in Home Prefill – with its ability to pre-populate most of the average home insurance application – it’s encouraging that the majority of home insurers perceive that property and past policy contributory databases would be helpful in enabling pre-fill.
As such, Home Prefill presents an opportunity to leverage the value of contributory databases, representing as it does another important element in the insurance value chain as it continues evolving.
Automatic pre-fill is perceived to be of value by insurers when it relates to at least 50% of the home insurance application questions. But interestingly, pre-filling 50% of the questions is considered to be just as valuable as pre-filling 85% of the questions.
Insurers currently ingest claims data in various ways, with various perceptions
Home insurers overall consider prior claims data to be valuable. Most rely on consumer-stated information at quote, and a sizable portion use their own organisation’s retained customer data, to a greater extent than other pooled industry claims data.
Home insurance providers using existing claims data sources are generally satisfied, although value perceptions are given as moderate. According to the ratings of home insurers in our survey, the biggest current weaknesses are accuracy and completeness of all the needed claims information.
53% of home insurers said they are ‘very satisfied’ or ‘somewhat satisfied’ with the accuracy of information given by current claims data sources. 58% said they are ‘very satisfied’ or ‘somewhat satisfied’ with the the completeness of the information.
Three quarters of home insurers say that an enhanced prior claims contributory database would be beneficial to their business, and a slightly smaller number report being likely to consider using and contributing.
Integrating prior motor claims into the enhanced past home claims contributory database is also likely to bolster perceived value and interest among home insurers. Although fewer than half of home insurers currently use motor loss data in home policy underwriting, those who do find it quite valuable.
- 47% of home insurers said an enhanced prior claims database would be ‘very beneficial’ to their business
- 27% of home insurers said an enhanced prior claims database would be ‘somewhat beneficial’ to their business.
We commission this kind of research to shine a light on the future and to help our insurance clients with technology decisions and optimising investment, all with the consumer experience in mind.
Although home insurance today is not the most data-driven sector of insurance in personal lines, and there are mixed views on the different existing data types, it’s clear there is a willingness to exploit new data sources for a competitive advantage.
Today there is no claims data solution designed specifically to be used at the point-of-quote. It’s this hunger for change that we take as a positive as we look ahead to building out our Precision Claims Home solution with our insurance partners.
*LexisNexis Risk Solutions carried out an anonymous survey, the UK Home Insurers Study. Data collection: A mixed mode of web and telephone survey was used to collect data. To qualify, respondents were screened to meet the following criteria: Currently employed in the insurance industry (direct insurers, indirect insurers, brokers, and MGAs) with responsibilities related to underwriting or pricing. The sample was 77 home insurers who spend at least 30% of their time working in the personal home insurance sector.
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