Cross-market contributory claims data is set to transform the claims process

Carla McDonald 
Product director, claims, LexisNexis Risk Solutions, Insurance UK and Ireland

Claims data could empower insurance providers to better segment their customers and deliver the type of more personalised insurance quotes and claims services consumers want

The US insurance market has some fundamental differences to the UK, one of which is the use of highly granular claims data shared across market segments to help inform decisions throughout the customer journey. Now this concept is coming to the UK at a good time as the economic environment creates an uptick in fraud and consumer expectations rise.

LexisNexis Precision Claims—the first insurance claims database combining home and motor claims history with cross-search functionality—is a great example of the power of industry contributed data to mitigate fraud risk, expedite claims, deliver accurate quotes and a better overall customer experience.

As this cutting-edge database collects claims data from insurance providers, early adopters will see the benefits of being first to the party. There has been such a force of support for this initiative with LexisNexis Precision Claims delivering a market-wide view of home and motor claims history for an individual at the point of quote, mid-term adjustment and claim to participating UK insurance providers.

Not only will users be able to have a clear vision of an individual’s claims history within a market sector, helping to tackle non-disclosure of claims, but cross-search functionality will enable insurance providers to better predict claims losses based on the individual’s claims history, knowing that a motor loss can be predictive of a home loss and vice versa.

Indeed, US research demonstrates that 41% of consumers under report previous motor claims and people with undisclosed motor claims have a 34% higher average claims cost, compared to people with the same number of disclosed claims. Meanwhile people with three or more motor claims incur home claims losses that are approximately 40% higher in cost than those without any motor claims.

At claim, insurance providers should be able to answer questions that have previously been very difficult to answer. For example, has this individual had multiple claims previously for escape of water? How have those claims been settled to date? What remedial action was taken to prevent a further claim?  In motor, the claims database should empower insurance providers to see what type of claim or claims have occurred previously and when, plus whether the car was repaired or replaced and any personal injury claims associated. This level of insight can help flag potential fraud such as ‘crash for cash’ or patterns of claims across multiple insurance providers that would put claims teams on high alert. In essence, granular, cross-market claims data is hugely valuable in determining the claims strategy for a new claim.

In pricing, past claims data may help them decide where they may want to offer a discount at new business. Taking the no claims discount (NCD) as an example, currently a consumer might build up a NCD on their motor policy, but may automatically lose that discount if they make a claim. By accessing historical contributory claims data from across the market, the insurance provider may choose to offer a discount anyway as the claim was a non-fault, low cost, or it happened some time ago. By using data, the insurance professional can justify, actuarially, that they can still give that consumer a discount.

So it is easy to see how contributory claims data provides the opportunity for insurance providers to make reasoned decisions on how to treat individual consumers. This is important because in addition to the threat of fraud, UK insurance customers are becoming more demanding. Indeed, a recent study highlighted that 61% of consumers want greater personalisation and customisation of their insurance policy. If insurance providers know more about a person’s claims history across multiple lines of business, they can do more to help them access accurate quotes, suggest ancillary services such as escape of water detectors to help them mitigate future risk and manage their claim based on the clearest understanding of the industry’s claims experience with that customer and/or their home or car.

We’re only just scratching the surface of the possibilities with claims data. In the year where the Financial Conduct Authority implemented a package of measures to improve competition and help protect home and motor insurance customers from loyalty penalties, claims data could empower insurance providers to better segment their customers and deliver the type of more personalised insurance quotes and claims services consumers want.

Image sources: Canva and LexisNexis Risk Solutions

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