How data is helping to tackle motor insurance costs

Authored by Tom Lawrie-Fussey, senior director of product management, U.K. and Ireland, LexisNexis Risk Solutions

The Association of British Insurers (ABI) has released ten steps to tackle motor insurance costs for consumers struggling to afford motor insurance. Looking at steps 1, 3 and 8, data enrichment has a huge and growing role to play in supporting fair and accurate pricing in motor insurance. Every one of our solutions works to improve pricing decisions, lower the risk of claim and improve the customer experience. Ultimately, the judicious use of data has the power to reduce loss costs for motor insurance providers and in turn, lower premiums.

Step 1- Help consumers make more informed decisions:  As an outcome of our strategic alliance with Thatcham Research, insurance providers will, for the first time, have streamlined and automated access to Thatcham Vehicle Risk Data (VRD) via the LexisNexis® Informed Quotes platform. The VRD is used to assign an industry-standard ABI Code and Group Rating score to vehicles and is integral to how insurers assess and rate risk for all wheels-based insurance products. Insurance providers will also benefit from our extensive linking and data normalisation expertise to match vehicles to Thatcham VRD with greater consistency.  This is key to building awareness and trust amongst consumers. Ultimately, the more intelligence insurance providers can access on the vehicles they are insuring, the more accurate the premium and the more likely they are to be able to deliver a swift claims experience. 

Step 3 - Tackle fraud and uninsured driving: Email address intelligence through LexisNexis® Emailage Rapid is already flagging the risk of fraud at the point of quote for insurance providers in a seamless and frictionless way.  Highly granular cross-market claims data from LexisNexis® Precision Claims will add further detail to the picture, helping insurance providers identify at quote through to claim, fraudulent behaviours.

Fraud prevention also extends to quote manipulation. In our 2022 study of motor insurance buyers, 21% confirmed they think it is completely acceptable to manipulate the information they provide for a cheaper motor quote. Responding to this challenge, LexisNexis Risk Solutions created a specific manipulate module within LexisNexis® Quote Intelligence. This identifies potential misrepresentation including the possibility of fronting, through changes to declared information for proposers and named drivers between quotes. This helps protect insurance providers from inaccurate pricing and potential fraud, while consumers avoid their policies being rendered null and void if deliberate misstatements are uncovered at claim.

Fraud prevention using identity validation solutions and data enrichment can help shield genuine customers from organised fraudsters and help protect those that are tempted to be less than honest, from themselves.

Step 8 - Advocate for safety-focused vehicle technology: Our data shows that cars with advanced driver assistance systems are 30% less likely to have a claim.  We fully support the proposals to make safety systems mandatory and have already taken huge steps to ensure the insurance sector understands this technology to price effectively. Knowing to what extent the safety technology on a car cuts accident risk is crucial – and is becoming more critical as car technology evolves.  So, we’ve built a product that allows us to translate the technology into plain English.

LexisNexis® Vehicle Build is the first and only point of quote solution to confirm the presence and function of ADAS at the unique vehicle level.  This is provided to insurers as both a simple rating (0-5) indicating the effectiveness of the ADAS in reducing the likelihood of a claim and in granular detail.  And, of course, with critical ADAS information at their disposal, insurance providers could help provide interested customers with a greater understanding of their vehicle’s safety technology; what specific ADAS fitments are for and how they relate to claims, thereby providing significant opportunities for increased customer engagement and further adoption and use of the tech. That should mean safer roads for us all.

In essence, we have made it possible for the increasing number of people with ADAS in their cars to buy insurance based on the exact capabilities of their car, and as technology increases and vehicles function autonomously, we will continue our quest to deliver this insight and ensure fairness.

The emergence of deeper insights on vehicles to work alongside insights on the driver/s could not have been better timed.  The more intelligence insurance providers can access on the individual and the specific vehicles they are insuring, the more accurate the premium, helping to stem losses and ultimately, lower premiums.