5 key benefits of data enrichment for the Insurance Industry

resonateData enrichment provides both insurers and brokers with an opportunity to leverage the vast amount of information they already have and combine it with external data sources to improve business acquisition and enable them to more accurately assess and price risk at the point of quote.

In the past, insurers and brokers had little choice but to rely on information collected at the point of quotation, most often provided by the proposer.  But now with increasing levels of new business being shopped for and written online, there is access to a wealth of public and private data which includes data relating to the individual, their location, property, demographic and lifestyle information.

This data can be used to try and predict customer behaviour, analyse trends, uncover new patterns and improve risk exposure.  Real-time data validation at the point of quote allows additional facts relevant to the risk to be discovered. This has a number of key benefits for insurers and brokers which include:

  1. Increased fraud detection rates

Insurers are experiencing unprecedented levels of application fraud activity. ABI research shows that in 2014 insurers uncovered 212,000 attempted dishonest applications for motor insurance, which is equivalent to just over 4,000 every week.  Statistics show that drivers who lie on their initial application are 66% more likely to make a claim in the future, so the more focus insurers and brokers can put on their initial assessment of drivers, the better.  Patterns, trends and anomalies can be spotted quicker and costs savings can be made by earlier assessments of fraud and identifying early cancellation cases.

  1. Improved competitive position

Data enrichment helps to provide insurers with a single customer view by combining public and private data with quote intelligence.  Insurers are, therefore, able to more accurately assess their customer base and be more selective in terms of the risks they want to underwrite. Thus avoiding poor performing risks and more easily identifying their best customers and those with the highest lifetime value for improved profitability.

  1. Enhanced customer loyalty

Data enrichment can provide insurers and brokers with a richer, deeper understanding of their existing customers. Adding valuable business data to individual records in your database can transform your customer data into customer intelligence. A wider knowledge of your customers’ behaviour and lifestyle means that products can be specifically tailored thereby enhancing customer loyalty and retention.

  1. Greater cross-selling opportunities

A better understanding of your customers leads to more relevant targeting and more opportunity to cross-sell complementary products.  By verifying the customer is who they say they are at point of quote and assessing their credit worthiness, those customers with a higher propensity to purchase add-ons can be identified.

  1. Reduced costs in settling claims

The claims process is time-consuming and demands a lot of resources.  Assessing the propensity of the customer to fulfil their credit commitments at application stage, means that scrutiny of the data at claims stage is reduced, enabling claims to be dealt with quicker, requiring less time and resources to be spent in settling claims and ultimately improving profitability.

The future of data enrichment
In today’s technologically driven society, new ways of exploiting data to gain competitive advantage and new data sources will always be found. Insurers will continue to embrace new data sources and the greater visibility and insight this brings.

Business Insight has a range of products designed to support quote enrichment, risk selection and claims validation as well as the pricing and underwriting of insurance.  We have recently built our own data hub and will be launching the next generation of high resolution property level geographic risk models next year. This will allow users access to more accurate perils information at the point of quote. More details to follow on this in our next newsletter.