The big picture in claims history comes into view

Samantha Marsh, director, product management, UK and Ireland, LexisNexis Risk Solutions, Insurance.

Customer complaints about insurance claims are up; the average value of insurance fraud is up; motor and home premiums are up. It is no secret that this is a very tough time for the insurance market. Deeper insight around claims history coming early in 2024 through LexisNexis® Precision Claims could however, change the game for the market, helping insurance providers to speed claims settlements, reduce fraud and price fairly and accurately. This will be the general insurance market’s first claims contributory database to allow a cross view of an individual’s home and motor claims history across the customer journey.

We have discussed before in Claims Magazine how complaints cost money. Yet complaints about motor and buildings insurance in the UK reached their highest level in half a decade. From April – June 2023, according to the Financial Ombudsman Service (FOS), costing the sector over £4.2m in fees alone to the FOS. Car and motorcycle insurance cases represented 36 per cent of all complaints to the Ombudsman in this period, compared with 29% over the same period last year. Buildings insurance complaints meanwhile, represented 40% of all claims. In motor, the largest increase was complaints about delays in claims, with complaints up 90% compared to April- June 2022.

While consumer satisfaction falls, costs are rising. According to Consumer Intelligence, the average quoted price of home insurance rose by 25.7% in the past year – the highest annual increase on record and in June, the ABI’s motor insurance premium tracker showed that the current average motor premium is 21% higher compared to Q2 2022 and is at its highest since the data started to be collected in 2012.

And, as the value of mortgage arrears jumps by a third, insurance providers are all too keenly aware that the cost-of-living crisis may be tempting people down previously untrodden paths. Indeed, the latest fraud statistics from the ABI show that the average fraud rose to a record £15,000, up 20% compared to 2021.

With a host of insurance providers across motor and home on board, a new market-wide contributory claims database could not arrive at a better time. As well as helping raise red flags for fraud, the new database can help smooth the quotation and claims journey for the vast majority of honest customers.

So how will this new contributory database help in practical terms?

If an insurance provider has access to a market-wide claims database, it would help speed the journey for the customer by filling in the blanks about their claims history while providing more context for a past claim for fairer risk assessment. For example, a claim for damage to a car that was hit whilst parked and unattended may carry a completely different risk profile to a collision whilst driving the vehicle, regardless of fault.

Another practical benefit of a cross-market contributory claims database is its support in obtaining more accurate risk prediction and therefore pricing. A similar database has been available in the United States for some time now, and we know from U.S. analysis that people with three or more motor claims incur home claims losses that are approximately 40% higher in cost than those without any motor claims. It is easy to see what difference the full backstory on a potential customer’s motor claims history might make when quoting on a household policy. It also puts insurance providers in a more informed position to discuss how risk could be mitigated in the future.

Of course, past claims data can also play a big part in assessing and determining claims strategy at First Notification of Loss (FNOL) and the onward handling of that claim. It can help speed claims through by streamlining some of the validation processes needed. Fewer questions and quicker decisions means much less friction for genuine claims. Bring in accurate, real-time vehicle valuations data from LexisNexis® Vehicle Insights and the opportunity to provide a swift and smooth claims experience is there for the taking.

But what about those determined to beat the system? Vitally, industry contributed data on claims history will offer another tool in the market’s anti-fraud armoury. For example, LexisNexis® Precision Claims could easily identify multiple claims for the same types of losses with different providers or even perhaps the same email address keeps re-occurring for seemingly unrelated claims.

The big picture on claims history is coming into view for the first time to help insurance providers exceed the expectations of their customers, justify pricing decisions and tackle fraud. LexisNexis® Precision Claims will show how market collaboration on data remains key to solving some of the biggest challenges facing the insurance sector.

This post is sponsored by LexisNexis Risk Solutions.

Image: LexisNexis Risk Solutions

Guest Post This post was created just for Claims Media by a guest contributor.