How to do more with less data – A Q&A on data minimisation with LexisNexis expert James Burton
A Q&A with James Burton (pictured), MD, UK and Ireland for LexisNexis Risk Solutions, Insurance
Q: So, what’s data minimisation James?
In essence it’s about having the right data in the right place at the right time – whether that’s at quote, mid-term adjustment or claim. Sounds simple doesn’t it but the key is knowing what data is going to be most valuable to an insurance provider to provide a competitive difference – it’s got to be useful not just interesting.
The data available to the insurance market is growing exponentially and it is all too easy to allow this to become a distraction. We help insurance providers work through that process to ensure they are only using the data that’s appropriate to their risk appetite. That means quicker, more accurate decisions – good for the customer, good for the insurance provider.
Q: How can they choose what’s right and what’s wrong?
It starts with the basics – the key data that will verify the individual is who they say they are, at speed, at the point of quote through to claim. There might also be essential information on the asset such as the make, model, valuation and Thatcham Vehicle Risk Data (VRD) for vehicles which will be streamlined in real-time into the quote process.
The next step is working out what additional information will tell the insurance provider more about that individual plus their home or vehicle based on their book of business and underwriting appetite. We’ll run retro tests with insurance providers so they see what a new dataset could offer in improved performance.
Q: What kind of data enrichment are we talking about here?
In motor, insurance providers need to know much more about the ‘metal’ given the pace of technological changes in car manufacturing and the aftersales services and upgrades offered by vehicle manufacturers. We know for example that Advanced Driver Assistance Systems (ADAS) can reduce claims risk by over 30% and as eight in 10 new cars have some form of ADAS it’s crucial for motor insurance providers to understand exactly how a vehicle is equipped at the point of quote so they can offer the fairest quote to customers. Where Electric Vehicles are concerned it’s also becoming vital for insurance providers to know the type of battery in the vehicle and how costly it might be to repair or replace in a claim.
It’s down to us as data providers to find solutions to these challenges and many more, not least insights on vehicle updates that have happened post sale that would change the risk of that particular vehicle for the insurance provider. We’re already well down that road in motor through LexisNexis® Vehicle Build, our ADAS data enrichment solution and LexisNexis® Vehicle Insights, our one stop shop of data on the history and status of every vehicle in the UK car parc.
Q: What about property risks and climate change? There seems to be a whole host of data insurance providers need to make a full and fast assessment of risk?
This is true, they need to understand the risk of the person, the property, the place and the peril (subsidence, flood, windstorm, wildfire and crime). Insurance providers need to access this data in a very streamlined way so that they can gain an immediate, 360-degree view of the risk of a single address or building footprint without having to call out for data from multiple sources. If they are writing policies in areas known to have flash floods for example, they can use data to identify which properties may have basements that could be at risk. They can pick and choose which data insights are valuable to their business. They can also choose to view that data in map form so that they can get an instant view of their entire book of business.
Q: And it would make sense to use perils data for assessing motor risk too?
Absolutely. We know that in extreme weather events vehicle claims can be high. A motor insurance provider will want to know flood, wind or wildfire risks for their existing policyholders and at new business to limit their exposure to future losses.
Q: What’s next on the horizon to support data minimisation?
Highly granular claims history data for both the person and the asset through LexisNexis® Precision Claims, our cross-market claims contributory database. Unless an insurance provider has insured an individual consistently over a number of years across both home and motor products, it is very unlikely they will be able to build a complete, single version of the truth for that individual’s claims behaviour as well as the claims history for their home or car. We’re solving that challenge.
Imagine the power of knowing the claims history for a property, at the point of quote through to claim, going back 12 years. Uniquely we’ll also be able to provide the full claims history across home and motor for an individual to insurance providers contributing to both the home and motor claims databases.
Q: That’s more data right, not less?
It’s more insightful data – that’s the nub of the matter. Insurance providers need to select the data that will do more for them and their customer at each stage of the customer journey. As data insights from businesses such as LexisNexis® Risk Solutions become more powerful and predictive, insurance providers can pick and mix what they need to meet their business objectives.
