How claims data can enhance customer experiences

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Carla McDonald  
Senior vertical market manager  
LexisNexis Risk Solutions UK and Ireland

Insurers need to understand more about the customer at each point in the insurance journey through claims history gathered from across the market

There’s little doubt that consumer behaviour and expectations have changed in the past 18 months—keeping pace with these changes through granular, market-wide claims data in workflows will be key for insurance providers as we head into 2022.

As claims professionals know, not all claims are equal. They need to be in a position to challenge any claims that aren’t true, or if something doesn’t feel right. Given how claims trends have changed in 2020 and 2021, spotting possible fraud from genuine claims may have become more challenging.

There has been a downward trend in relation to escape of water—people at home were better able to spot a leak before it caused significant damage. We’ve also seen an upward trend in relation to accidental damage—spillages on computers, phones and breakages in relation to glass.

At the same time, Covid-19 has accelerated and heightened customer expectations. People want insurance quotes to be swift and straightforward: why click 20 times for a quote when 10 would do? The industry has made great strides in streamlining the application process but there is still a big opportunity to prefill past claims data to support that part of customer journey.

Customers also want claims to be resolved as quickly as possible so they can move on with their lives. This is where the value of insurance comes to life for the individual.

So how is the industry meeting these expectations today? 

LexisNexis Risk Solutions carried out research among 3,000 residential homeowners and renters and found the top reasons for renewing include good coverage, good customer experience and a premium that is the same or not that much different from the previous year*.  And, when it comes to price, we found that roughly a third of individuals feel that their premiums are too high. It comes back to customer experience—how can insurance providers demonstrate throughout the journey that there is value in relation to the service that a customer actually receives?

We also found that consumers who have not made a claim in recent years, or have never made one, tend to be more likely to believe their premium will increase. Those whose premiums did increase after filing a claim are more likely to expect this to happen again if they file another claim—and this may deter some from filing future claims. Less than one in five home insurance customers have filed a claim during the past five years, and more than half have never filed a claim.

But perhaps the most concerning of all our findings is that two thirds of consumers think it is somewhat or completely acceptable to manipulate the information that they provide when using price comparison websites, to get a cheaper home insurance quote. It could be the number of claims, or it could be the nature of the incident, but the fact remains that if fraud is found then the policy becomes null and void so data manipulation has serious implications for the customer as well as the insurance provider.

Solving these different dynamics comes down to understanding more about the customer at each point in the insurance journey through claims history gathered from across the market. Recognising the benefits it could offer the market, we are building this database now for launch in 2022, starting with home followed by motor and commercial.

We believe this solution can help insurance providers remain competitive, with price points that really reflect the customer’s risk, and products and services that meet their needs. This is aside from the efficiency savings through, for example, automated verification of past claims and fraud risks flagged at claim—reducing the potential for friction with genuine customers.

Highly granular claims data also creates an opportunity to delight the customer through a smoother application, quote and claims journey, reducing the reliance on them to supply information about past claims.

Contributory claims databases offering near real time information about claims can really help change the face of underwriting and claims management.

* LexisNexis Risk Solutions was not identified as the sponsor of this research, which was based on an online survey of 3,083 residential homeowners and renters (including 1,576 homeowners and 1,507 renters). The research was completed during 2019.
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About Author

Mark Dugdale is the editor of Claims Media. Mark welcomes articles, letters or feedback from readers and can be reached via mark.dugdale@barkerbrooks.co.uk