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Mitigating the impact of rising claims costs

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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

 

Finance

In 2024, payments will evolve to broaden accessibility

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Attributed to Roy Aston, COO at Paysafe.

 

As we look to 2024 and beyond, businesses will need to adapt experiences to changing consumer needs and demands, working with payments providers to increase accessibility, offer broader choice, and more.

We break down some the forces driving evolution in payments over the coming years.

Payments need to be available to everyone, everywhere

Regardless of their location or situation, consumers do not want to wait when it comes to payments. The proliferation of smart devices has given users access to everything, all at once, and this is also expected when making transactions.

In 2024, banks and financial institutions will continue to push ahead with this journey to offer smooth, secure payments to everyone, everywhere, delivering services at the lowest possible barrier to entry. This also means ensuring consumers, even those that are unbanked or underbanked, have access to remittances and cross-border payments.

The first step in achieving this goal will be to improve reliability, security and availability, which may see traditional payment methods like debit and credit cards – still the most popular payment methods – become less dominant, while alternative payment methods (APM) like eCash and digital wallets will grow.

This is because, with the right payment provider, merchants can ensure these APMs are available anywhere in the world – eCash, for example, does not require a bank account to use. In addition, digital wallets and online cash can offer swift, secure transactions, helping users overcome security issues by not requiring them to enter their financial details.

Financial companies will embrace collaboration in 2024

While businesses can address consumer payment concerns using APMs, they must also look to bolster their own defences as the threat landscape changes. Increasingly advanced technology, like AI models, are now accessible to far more people, including threat actors.

To combat this escalating threat, it’ll be no surprise to see more financial companies collaborate in 2024 as they seek to improve cyber risk mitigation. This makes perfect sense – and would be a positive step for the industry – though it is easier said than done.

Businesses must share data legally, while aimed toward a positive purpose, rather than for pure profit. For example, if a financial organisation gains intelligence on a cyber group, they could share this with other companies to protect against bad money movement.

Ideally, collaboration could help improve anti-fraud, anti-money laundering, and cyber security measures, and more broadly reduce risk for businesses and consumers alike. But first, thinking around data governance may need to change.

Existing trends will evolve

While exciting new trends will emerge in 2024, we’ll also see the evolution of some that have yet to reach their full potential.

Embedded payments, for example, will continue to develop, with more businesses bringing together financial products with features like loyalty schemes to offer more added value to consumers.

Decentralised finance, too, should continue to build momentum in 2024. While decentralised finance, and specifically NFTs, have faced challenges this past year, it will be no surprise to see companies get to grips with changing regulatory requirements and continue to build in this area.

Open banking could also see a big 2024, with more APIs becoming available, and companies starting to develop new solutions to enhance customer experience and reduce friction in the payment ecosystem.

And while evolution rather than revolution is a necessity in technology, it’s always exciting to look ahead to the big trends that could shape the future – perhaps not in the year ahead, but beyond.

The future is quantum

Quantum computing is a trend that is as exciting as it is potentially frightening. Able to perform computations that are exponentially faster than ever before, quantum computing represents a new frontier and it will be thrilling to see how it is used in the years ahead.

Combined with AI, for example, quantum computing could optimise processes at a speed and scale never seen before – with serious benefits passed onto consumers.

In the nearer term, however, ensuring payments are available and accessible for everyone must remain the focus in 2024.

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Technology

How to protect your business from the rise of sophisticated cyberattacks 

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Suhaib Zaheer SVP, Managed Hosting at Digital Ocean & GM, Cloudways  

In an age where technology drives business operations, the threat of sophisticated cyberattacks looms over organisations of all sizes. From stealthy ransomware attacks to intricately orchestrated phishing schemes, the arsenal of online adversaries is expanding. Cyberattacks were listed as one of the biggest threats to the UK in the 2023 risk register. Added to this, 97 people per hour fall victim to cyberattacks. The threat of a cyberattack not only jeopardises businesses and their valued employees but also poses a significant risk to their customers. A breach of security has the power to decimate an organisation’s hard-earned reputation and impose severe financial distress.

Today, safeguarding your business against the rising tide of sophisticated cyber threats is no longer a choice. This article explores actionable ways to fortify your business’s defences, empowering you to navigate threats with resilience.

Navigating the cybersecurity landscape

Over the past few of years, the widespread adoption of remote work practices surged, consequently exposing businesses, particularly SMBs to elevated cybersecurity risks.

Suhaib Zaheer

Before remote work, businesses could dictate strict rules governing the access points for critical documents. Company computers were tethered to office desks, seamlessly connected to in-house servers. The primary concern for management teams was fortifying the office server and upholding computer security.

Fast forward to today, and the workforce is no longer confined to office walls but spans cities, and even countries. This shift brings a twofold challenge—exposing vulnerabilities in servers and individual computers. Added to this, the intricacies of data protection laws differ in each country. Companies must equip teams with secure technology that provides enterprise-grade security to protect against hackers and sophisticated threats.

The challenge lies in not only supporting dispersed workforces but doing so without compromising the sanctity of sensitive information in a world where data security must align with international legal intricacies.

Fortifying small businesses

Small business owners find themselves particularly susceptible to security and privacy threats due to their limited resources, which often translates into inadequate cybersecurity measures compared to their larger counterparts. Even if resources are limited, business owners can safeguard against security pitfalls by implementing well-defined security procedures in collaboration with their employees – making it everybody’s responsibility.

Building customer trust hinges on the assurance that their information is secure when interacting with a company’s website. Recognising the pivotal role of customer trust in the sales process underscores the critical need for businesses to make cybersecurity a top priority.

Prepare for future threats

Outdated technology remains a vulnerability for businesses, as the repetitive and resource-intensive nature of updating website security opens avenues for human error. Solutions capable of automatically detecting updates, executing secure backups, and enhancing security procedures alleviate this burden, eliminating the need for manual maintenance.

AI is capable of handling laborious tasks as it analyses data for anomalies, swiftly detecting and flagging abnormalities for cybersecurity teams to address. AI-powered solutions also automate time-consuming processes, securely updating websites and backing up data, enhancing overall efficiency.

Critical features for website resilience also include the ability to manage traffic surges seamlessly. Optimising bandwidth capacity minimises friction during peak periods, ensuring responsive handling of heavy traffic loads. Crucially, automated technology that adjusts bandwidth capacity during traffic surges prevents system failures and unauthorised access.

Additionally, businesses can safeguard against security pitfalls by implementing well-defined emergency procedures in collaboration with their employees. The urgency instilled in employees when they receive seemingly urgent demands from their employers creates a vulnerable juncture that cyberattackers exploit, seizing the opportunity to pilfer information and gain access to sensitive data.

Furthermore, business owners must invest in robust security measures, implement secure payment gateways, and educate users on mobile security practices to build trust and safeguard information. Staying abreast of the evolving security landscape and adapting cybersecurity strategies to meet changing customer expectations are crucial for business success.

As we move towards a new year, it is clear that businesses need to ensure that security is a top priority. Cybercriminals will continue to use new technologies to launch ever more effective and creative cyberattacks, so businesses need to ensure that they are working to protect their data with a similar level of ferocity. This will be a key aspect of supporting business growth and success in the future.

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