Tom Lawrie-Fussey senior director of product management, U.K and Ireland, LexisNexis Risk Solutions, Insurance says:
The motor insurance market is under immense pressure from claims inflation – labour costs are up by 40% and vehicle repair costs have risen by 33%[i] . For every £1 motor insurers received in premiums, £1.10 in claims and operating costs were paid out in 2022[ii]. However, motor insurance providers can claw back some control through the effective use of the latest data enrichment solutions. Innovations in vehicle, person and place data delivered through one gateway can help them understand the risk of a claim and how much that claim could cost, to a high degree of accuracy.
Take vehicle centric data, it is now possible to build an immediate and granular picture of the history and value of a vehicle as well as the risk related to how well that vehicle has been maintained through LexisNexis® Vehicle Insights. The beauty of this data enrichment solution is that it can be used in tandem with unique information on vehicle build via LexisNexis® Vehicle Build to identify the presence and performance of Advanced Driver Assistance Systems (ADAS) features for that specific vehicle. That means insurance providers can understand in an instant the features the vehicle was ‘born’ with and its life after leaving the production line and what that means from a risk perspective.
Insurance providers can then bring in predictive information on the drivers/additional drivers of the vehicle such as their policy history through solutions such as LexisNexis® Policy Insights. For example, past cancellations can equate to 70% higher loss cost and an individual with multiple NCD entitlements at any one time has a 33% higher loss cost. In addition, individuals with gaps in cover have a 55% increased likelihood of cancelling a policy mid-term[iii].
A cross-market view of the claims history for the car or home as well as the individual through LexisNexis® Precision Claims, offers immense predictive potential. This is really evidenced in U.S. analysis[iv] which shows people with three or more motor claims incur home claims losses that are approximately 40% higher in cost than those without any motor claims.
The next step could be to bring in more detailed information about the property and the address using geospatial data intelligence to understand theft risk, and indeed garaging and/or parking at the address.
There are many factors in understanding motor insurance risk but by using one gateway to some of the market’s most powerful data enrichment solutions, insurance providers can make more informed decisions that could help mitigate the rising cost of claims.
[i] https://www.abi.org.uk/news/news-articles/2023/8/sustained-cost-pressures-on-insurers-push-the-average-price-of-motor-insurance-to-a-record-high/#:~:text=The%20average%20premium%20paid%20for,this%20data%20back%20in%202012.
[ii] https://www.ey.com/en_uk/news/2023/06/ey-uk-motor-insurance-results-analysis
[iii] Based on LexisNexis Risk Solutions Analysis
[iv] Based on LexisNexis Risk Solutions internal studies of U.S. personal lines claims histories
