Understanding the risks of perils for pricing at point of quote is a major priority in home and commercial property insurance but this has often meant calling out for data from different sources, which can slow down the process.
In a market first, geospatial data including flood, fire and subsidence are now instantly available alongside 42 further data enrichment datasets including publicly available data and identity verification data, property and business data from one access point – the LexisNexis® Informed Quotes platform.
To know about the one of its kind geospatial data platform, we interacted with Neill Slane, Senior Vertical Market Manager, for Claims and Insurance at LexisNexis Risk Solutions, UK & Ireland.
Geospatial data and insurance – What’s the connection?
The home and commercial property insurance sector needs geospatial data intelligence on perils such as fire, flood, subsidence as well as local hazards and crime rates to calculate the likelihood and cost of an insurance claim. This data is used alongside a range of additional public and proprietary data sources to help insurers price policies more accurately, make better decisions about underwriting and marketing strategies, and to support customers at risk of being impacted by extreme weather events and any subsequent damage.
The cost to the insurance sector for claims related to environmental risks is significant. Pay outs to policyholders were expected to exceed £363m from storms Ciara and Dennis at the start of the year. As such, there is increasing demand amongst insurance providers for swift access to timely and accurate perils data.
How developed is the global insurance market in terms of using geospatial data for risk identification etc.?
The use of geospatial data tends to have progressed in regions where the insurance market has taken a sophisticated approach to pricing and underwriting for environmental risks and there is a need to build a greater understanding of the risk due to severe claims losses from past events.
The application of geospatial technologies, and the rate of adoption, in any market will also often rely on the availability of appropriate datasets that can provide the kind of actionable data insurers are able to make a decision on and the ability to deliver this into their work streams.
Each country has its own unique set of environmental challenges and is at different stages in the use of geospatial data. However, the UK and Ireland, US & Europe are areas where the use of Geospatial is more advanced and an embedded part of the insurance sector.
How are you enabling the insurance sector leverage the power of geospatial?
Insurance providers need insights they can act on. LexisNexis Risk Solutions provides data that has a direct correlation to risk/claim to help the market make more informed decisions. We feed that to the market in the way it needs it and at the time it’s needed. Streamlining access to perils data for use alongside other rating factors at the point of quote will make a big difference to how quickly and accurately a customer is priced and covered.
In addition, the ability to visualize perils data is highly valuable to the market. For example, the ‘live’ data we provide on extreme events as they are happening is vital to enable the insurance sector to get on the front foot to adjust pricing, manage resources and support claims.
Traditionally, insurance providers needed to request perils and environmental data from several sources, which can delay quote processing and lead to referrals. We’ve removed that barrier.
Also, in many instances of perils data, the data is being used at a postcode level rather than at an individual property. However, when the data available through our Informed Quotes Platform is used in tandem with addressing technology from LexisNexis Risk Solutions, insurance providers can determine risk down to the individual property, ensuring each property is assessed on the specific peril properties at that exact location – enabling finer risk assessment and pricing decisions.
How has been the response from the industry so far?
Hugely positive. Providing perils data at point of quote to the insurance sector alongside a whole array of additional data sources, is a big step in the right direction for the market and comes at a time when the insurance sector is under huge pressure to deliver fair pricing to customers and facing increasing threats from environmental risks. We have several customers who are already accessing perils data from Informed Quotes, and we expect the volume to grow.
What the geospatial industry needs to do make such platforms a more common phenomenon?
There is a strong opportunity for the geospatial industry to work with data providers like us to distribute data into the insurance market. ‘Live’ data is far more powerful than static data and therefore we are focusing our attention on developments in this area.
What changes do you suggest in the ecosystem for such geospatial based solutions to flourish?
The insurance sector is already highly regulated and as part of this, insurance providers have an obligation to treat customers fairly. That means pricing the policy risk based on the clearest, most holistic understanding of their individual risk, not the risk of that postcode or the risk of that general address as an address can contain several properties. We would like to see a much greater emphasis on the need to use data on individual property risk. We also see there would be value to be gained from access to data on properties that have been made flood resilient so that the insurance sector could factor for this when underwriting the risk. Currently this information is held with local authorities.
We are hopeful that with the changing times, partnerships and alliances will enable individuals and businesses to harness the power of geospatial data more effectively, leading to more informed decisions.
