Advertorial: Total picture of claims history now in sight

Harried parent number two arrives back at their car to find a huge dent in the bumper, damaging at least one of the parking sensors. They call their insurance provider to tell them what’s happened. They pay the price in lost No Claims Discount, a rise in premium and a £250 excess.

It is easy to see how this scenario can play out in a stressful environment, especially with many people already struggling to pay for insurance. For the victim, the outcome feels harsh to say the least but every claim impacts the cost of insurance, so nobody wins.

But what if insurance providers could take a more nuanced and possibly fairer approach to assessing past claims at renewal based on a wider view of an individual’s claims history going back several years?

Knowing that the bump by motorist number one was the fourth in a series of non-fault, low-impact claims over the past four years and that they have also had home insurance claims in this time period may put a different complexion on the risk. Or knowing that driver number two has not had a motor or home insurance claim in the past five years, might encourage the insurance provider to offer a discount at renewal because they determine that this customer is actually a good risk.

The problem is that until now, insurance providers have really had no way of knowing this kind of back story for an individual’s home and motor claims history. In fact, granular claims data with cross-search functionality has been a big blind spot for the market, potentially leading to less accurate pricing for the consumer and higher loss costs for insurance providers. Lack of a cross-market view may also have impacted the sector’s ability to fully understand the customer’s needs.

Change is happening, however, the industry is now collaborating and a market-wide contributory claims database called LexisNexis® Precision Claims is set to provide an answer to this challenge.

LexisNexis® Precision Claims is a genuine first for the UK general insurance market, giving insurance providers the ability to view all the past claims for an individual across home and motor. Created to support risk assessment at all points of the customer journey, it will enable insurance providers to access highly granular claims data gathered from across the market, through one platform, to help provide a true understanding of the insurance sector’s claims’ experience with an individual.

The power of this intelligence is evident in the experience of the US insurance market where claims data is already used in this way. According to US analysis[i], the application of claims data to assess risk has found:

• 41% of consumers under report previous motor claims
• People with undisclosed motor claims have a 34% higher average claims cost, compared to people with the same number of disclosed claims
• 14% of consumers have at least one motor and one home claim indicating a link between both lines of business
• People with three or more motor claims incur home claims losses that are approximately 40% higher in cost than those without any motor claims

Insurance providers can start accessing home and motor claims data for a person, a property and a vehicle including the type of claim, the circumstances and the settlement. This will allow insurance providers to cross-check claims history across motor and home for the first time. Coming back to our scenario at the start, if you know an individual has had three or more motor claims, then you know the cost of their home claims could be up to 40% higher. Understanding this may mean ancillary services or different products could be offered to the individual to help mitigate or reduce the risk of a home claim in the future.

LexisNexis Precision Claims can help the industry identify undisclosed claims, assist insurance providers in better predicting claims losses based on an individual’s claims history, knowing that a motor loss can be predictive of a home loss and vice versa[ii] and can play a key role in determining the correct claims strategy at First Notification of Loss.

We look forward to sharing the unique insights with those forward-thinking organisations who have embraced Precision Claims. It is another example of the power of contributory data to the insurance market at all points of the customer journey to help reduce friction, improve pricing decisions, mitigate fraud risks and support claims.

 

Carla McDonald is director of insurance claims product management, LexisNexis Risk Solutions, Insurance, UK and Ireland

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