Data has always been a core asset for the insurance industry. Understanding and calculating risk depends on accurate and timely data as well as the skills to manage it. As increasing numbers of the objects that we interact with on a daily basis become “smart” through the use of sensors and transmitters, the potential sources of data that insurers can draw on to better estimate risk as well as devise new products and services for customers also increases.
LexisNexis® Risk Solutions is adapting to these changes with a range of services designed to help clients better manage these new data flows. Building on the parent company’s long tradition of offering information management solutions at scale, LexisNexis® Risk Solutions Insurance is pioneering new approaches to integrating diverse customer information and integrating it with data from emerging technologies embedded in cars, homes and the broader IoT. In this interview, Jeffrey Skelton, Managing Director for LexisNexis Risk Solutions, Insurance (Europe) provides some interesting insights into how data and his company’s solutions are driving innovation across the insurance sector.
Martin: Can give a brief overview of what LexisNexis Risk Solutions Insurance does and where it fits within the LexisNexis Risk Solutions corporation?
Jeffrey: LexisNexis® Risk Solutions is part of RELX, a global provider of information and analytics for professional and business customers across industries.
LexisNexis Risk Solutions, Insurance in the UK and Ireland works with 97% of the motor insurance market and provides data for 75 million insurance quotes a day. We provide insights through data, analytics and technology to support decisions and processes through each stage of the customer journey. Our solutions for motor, home and commercial insurance providers encompass data prefill at application, data enrichment at point of quote, mid-term adjustment and renewal and increasingly at claim, plus customer data management solutions to help insurance providers achieve a Single Customer View.
One of our core strengths is hosting market-wide contributory based policy and claims databases to enable the market to gain a 360 degree of risk based on the industry’s experience with an individual. Over the past six years, we have worked with the industry on contributions of over 550 million policy transactions such as cancellations, and mid- term adjustments, providing unprecedented coverage of UK motor policies. Our analytics skills are uncovering new insights from this data, helping insurance providers make better decisions for their customers, based on industry-wide insight.
Martin: LexID® is an interesting new product for the insurance sector. Can you explain the problem it solves for the insurance sector and how it is being used by your customers?
Jeffrey: It has become clear that customer data management is one of the biggest challenges that today’s insurance industry faces. This is down to the high levels of switching in the market, separated database infrastructures within insurance businesses, as well as merger and acquisition activity.
Data that is stored in multiple silos as a result of legacy systems or merger and acquisition activity risks becoming outdated, incorrect and inconsistent. This can lead to wasted marketing budgets, customer service inefficiencies and inaccurate pricing to name a few. Pricing is a huge focus for the industry right now as the FCA has issued a report containing proposed remedies to address the need for insurance firms to provide fair value to their customers and greater pricing transparency. Added to this, insurers are under more pressure than ever to support their customers impacted by the Covid-19 pandemic.
LexID® for Insurance is a unique identifier built to amplify proprietary linking technology and normalise and link vast data resources to help insurance providers create a cohesive single customer view across underwriting, pricing, renewals and claims as it includes insurance specific policy data to match disparate identity information. With this single customer view, an insurance provider not only benefits from improved data accuracy but can identify cross-sell opportunities and new ways to deliver value to customers.
Martin: Does LexID have applications outside the insurance sector?
Jeffrey: As a proven ID matching solution, LexID has been the bedrock of our products and services for over a decade. This patented linking and clustering method is the machine behind many LexisNexis products that leverage authentication, verification and other identity management capabilities. As well as the insurance industry, LexID is used in financial services such as banking, life, pension and other sectors to support customer data management. It is also used in the U.S. to help find missing children.
Martin: LexisNexis® Vehicle Build is another new development aimed at helping insurers work with data from Advanced Driver Assistance Systems (ADAS). What are the challenges for insurers of working with ADAS data and how does Vehicle Build address them?
Jeffrey: Understanding ADAS fitments has been a massive headache for the insurance market, and we have been working hard to solve that problem. It’s not just the features that come as standard, but also those chosen as optional extras and how different features when available in combination on a vehicle or as part of a custom package can reduce the risk of an accident.
Each car manufacturer has created their own unique terminology, definitions and naming structures – sometimes releasing multiple features within the same model year – so bringing this data into the insurance ecosystem has been very difficult.
To address this challenge, we have created an ADAS classification system to logically sequence and classify vehicle safety features and component’s intended operation or purpose. This provides the foundation for insurance providers to access ADAS data at a VIN (Vehicle Identification Number) level for insurance quotes. They will be able to identify the specific ADAS features on the vehicle, understand what their purpose is and how they work to help prevent claims and use that to influence underwriting and better pricing for consumers.
Testing of the data to build an understanding of how ADAS fitments relate to claims is now underway with motor insurance providers in the UK and Europe; a development we are very excited about.
This solution will also help car manufacturers benchmark their ADAS against the rest of the automotive market and provide an opportunity for them to convey the benefits to customers of specific ADAS and their performance tied to claims information in the real world. In time, as both the automotive and insurance industry learns more about the impact of specific ADAS features on these claims losses, more awareness could help support greater investment in ADAS and in turn improve road safety standards.
Given that 80%[i] of new cars on sale in the UK are offered with a self-activating safety system, the more the market can prepare for the increasing penetration of ADAS equipped cars on the road, the quicker it will be able to reap the rewards offered by the technology.
Martin: How is LexisNexis Risk Solutions working with data from other data-generating technologies such as those deployed in smart cities, buildings and homes?
Jeffrey: We do see very positive trends in the application for some IoT devices. We have partnered with several home IoT manufacturers in the US to validate reductions in home insurance claims – both the frequency and severity due to the presence of the device. Also, with more people at home during the pandemic, we’ve seen the severity of home insurance claims reduce. For example, if an IoT escape of water alarm goes off, being there in person to shut off the water can stop an insurance claim becoming very expensive.
However, gathering enough performance or claims data to validate the value of any individual IoT device is an ongoing challenge. It takes time for a device to become widely distributed and the data centrally collected. Once that happens, we do expect to see a need to standardise and normalise the data collected by the many different devices that are in the marketplace today. The good news is we have been in this business for many years and we have extensive experience creating device generated attributes and scores.
Martin: Looking ahead, the rise of 5G, the IoT and other smart technologies will only increase the volumes and types of data available to organisations. How do you see this impacting on the insurance sector?
Jeffrey: These developments hold immense potential for the insurance sector. It will offer the opportunity to measure and understand risk in near real-time allowing for far more accurate underwriting and pricing of risk and a clear understanding of exposures at any given point.
It also opens up the opportunity for the insurance market to mitigate risk to a far greater degree than ever before and even, in some circumstances, stop claims from occurring.
Near real-time data from the environment agency is already being used by insurance providers through our LexisNexis® Map View geospatial data visualisation tool, to help understand and mitigate weather related risks such as floods and storms. 5G in smart buildings could add a further layer to that immediate understanding of property risk. Devices that constantly monitor risks will tell an insurance provider that a water leak has occurred or a fire has been detected for action to be taken in a timely manner to reduce the extent of any damage and therefore lower the claims cost.
In motor insurance, the connected car data exchange we have created between car manufacturers and the insurance market will give consumers the choice to benefit from their connected car data through more personalised insurance and other services. With the correct consumer consents in place, 5G will help make that data immediately available to the insurance market to understand how that vehicle is being driven at any point in time. This not only makes pricing truly personalised to the individual but allows the insurance provider to react immediately if an accident occurs.
At the crux of all these exciting possibilities is the need to make data from connected assets usable and accessible within the insurance space. That’s precisely what we do at LexisNexis Risk Solutions and exactly why we started developing a connected car data exchange over five years ago, in readiness for the connected car trajectory.
[i] Society of Motor Manufacturers and Traders: https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Motor-Industry-Facts-JUNE-2020-FINAL.pdf
