Updates from the Met Office in recent days have warned of ‘icy blasts’ gripping Britain, with conditions expected to worsen over the next week or so. This follows the winter storms Arwen and Barra which buffeted the UK and the Republic of Ireland in late November and early December of last year.
With adverse conditions so firmly on the radar, insurance businesses are increasingly seeking out innovative solutions that will allow them to leverage the wealth of information across their disparate internal systems and bring it together to form a holistic perspective. In discussion with Insurance Business, Carla McDonald (pictured), product director, claims, for LexisNexis Risk Solutions emphasised the “incredible role” data has to play in supporting insurance providers and consumers alike when it comes to surge events.
Surge events don’t always have to be weather-related, she said, but zeroing in on those specifically, it is widely expected that the market is going to see more of these events going forward. Between 1970 and 2019, around 11,000 surge events took place, so from a historical perspective there is clearly already volume there. When you combine that with data from weather agencies around climate change and environmental factors, it’s understandable why the insurance providers LexisNexis is speaking to are expecting to see an increase – in summer months as well as the winter season.
“[What we’re interested in] is how data at various points in a customer journey can help both the insurer and also the policyholder, as well,” she said. “At the point of quote, what data points can insurance providers use to make more informed and more accurate decisions around the risk that they’re looking to take on board through to that point of claim - and how you can support the policyholder on their particular journey? And what does that actually look like from a data perspective?”
It comes down to three key points, McDonald said – the ‘three Ps’ of what data insurance providers can use to their benefit and that of their policyholders. The first is concerning ‘the Person’ i.e. what you can understand about a policyholder when you consider them from a single customer view. This view is not something all insurance providers have because they have their data sat on multiple different platforms, and LexisNexis has seen numerous companies looking to explore how they can get to a single customer view and avail of the visibility of data this entails.
“If they don’t have that visibility of data, how can they make sure they serve the right products to [the customer] at the right time?” McDonald asked. “It’s also about where they spend time and investment in terms of marketing efforts and contact systems and structures because they could be wasting that. Also, if they’re holding this data in different places, there are storage costs associated with that as well. So, getting to a single customer view can really help when it comes to pricing and underwriting decisions.”
The second ‘P’ is about ‘the Property’, she said. The structure of a property is critical to how you think about a claim but how much can you understand about a particular property? The metric McDonald uses is to think, “if the walls of a property could talk, what would they tell you?” Insurance providers need to look to historic claims data to gain an understanding of all that has happened to that building since it was first built.
“To have that broader view of claims that have been made at a property, really helps them to think about the risk that they’re looking to place on cover and to support their pricing decisions, if they even want to put the property on cover,” she said. “If they find that actually there have been 10 flood claims here - equally it could be subsidence or different types of peril – then [the question is] what do they do with that information when they can see the bigger picture, when they can see it’s not just one claim at that property from the current policyholder?”
The third ‘P’ is ‘the Peril’, McDonald said, and exploring how insurance providers can use real-time data to pinpoint that peril, and support decisions being made around that. That comes into play when preparing for a surge event as you can see through a combination of real-time data and customer data, when you should be warning your policyholders that they have exposure to a risk. This allows companies to proactively contact their customers and warn them to be prepared.
Insurance providers often discuss how they stress test their systems to make sure they can cope during surge events, she said, and some of the storms over the last few years have seen the UK’s top insurers recording startling metrics, such as having a year’s worth of calls in a single month. This signifies an evolving trend across the market.
It is an advantage for providers to be able to understand their current exposure in this way and, with the right data platforms, they can do so in a very visual manner, she said - it’s not all spreadsheets and numbers. Through these platforms, the company can see that, for example, in a particular postcode a given number of properties are at risk based on other data sources and insights that have been collated. This gives them an overview of their overall exposure and reveals hotspots for claims. This, in turn, allows the provider to mobilise local teams, getting them in place on the ground to respond to and support policyholders.
“Ultimately, with insurance, until you put in a claim, it feels a very faceless process to go through,” McDonald said. “You being on the ground at that moment of absolute need for some of these homeowners and renters and business owners, that’s what’s critical in terms of being able to delight your customers who know you were there for them when they needed you.
“Technology can support in various ways in relation to apps that are available that providers can use to communicate with policyholders at the time-critical moment when they truly need support. [It’s about] those three Ps – the person, the property and the peril. As an insurance provider, if you have got access to data around them and you have that historic view of them as well, then that’s really helping to build a picture. That picture is both pre-surge, in terms of what you can learn and understand, and then post-surge with regards to how you can actually respond to that as well.”
