Using big data in the UK to classify residential neighbourhoods

resonateBig Data analytics is having an impact in many areas of industry. In the recent race for the US Presidency, it played a key part in Trump’s success. While the media in the US was consistently predicting a Clinton victory, behind the scenes it is reported the Trump campaign were employing an army of Data Scientists to crunch huge amounts of social media data using Artificial Intelligence (AI) (machine learning techniques) to work out who the marginal voters were. Looking at what people were doing, saying and communicating, they homed in on what key issues were most important for particular individuals, classifying them and then working out what messages they needed to target them with. Whether or not this was decisive is unclear, though it certainly will have had some influence on the numbers and the Trump victory.

Modern analytics allows us to combine large amounts of data from lots of different sources and use machine learning and AI techniques to convert this vast amount of data into meaningful insights to base informed decisions upon. Business Insight has built its own AI machine learning platform called ‘PERSPECTIVE’ to crunch huge amounts of data to produce estimates of risk or likely outcomes. Big data analytics in the insurance industry has a number of benefits for insurers; one of which is helping to understand customers better, others include helping to improve pricing, rating and underwriting through a greater understanding of risk.  It can also tease out hidden patterns and provide insights that may otherwise stay hidden.

The amount of data may have increased enormously in recent times though making sense of large volumes of demographic data and pigeonholing people is not something new.  A geodemographic classification assigns geographic areas to categories based on the similarities across a vast range of different variables. It is a structured way of making sense of complex and very large socio-economic datasets.

Streets and neighbourhoods can be classified into types such as ‘Affluent Achievers’ or ‘Comfortable Greys’ in wealthy areas through to types such as ‘Breadline & Benefits’ in more deprived areas. The products are based on the assumption that people living in similar housing and sharing similar characteristics across a range of factors relating to age, affluence, family composition and life stage are likely to have similar wants, needs and exhibit similar behaviour.

Geodemographic classifications have been around and used in industry for a very long time. The origins in the UK can be traced back to Charles Booth who analysed the 1891 UK Census and produced a classification of streets throughout London with neighbourhood types such as ‘Lowest Class. Vicious, Semi Criminal’ – not labels that would be palatable nowadays, even if accurate. With the arrival of the computer and as access to large amounts of data increased, we saw the emergence of commercial classifications in the 1970s with PRISM developed by Claritas in the USA and ACORN (A Classification of Residential Neighbourhoods) developed by CACI in the UK. The first versions developed in the 1970s were built from Census data and used by marketing departments to target product offerings more accurately. Since then the complexity, amount of different data sources used and the level of granularity has increased dramatically, as has the number of different commercial uses that the products are used for from advertising and target marketing through to analysing crime patterns and health resource requirements.

There are many different ‘lifestyle’ or ‘neighbourhood’ classifications though most are general purpose, i.e. they have been built with no specific industry or use in mind so can be useful across a range of industry sectors and for a range of purposes. In contrast, the ‘Resonate’ classification developed by Business Insight has been built with the insurance industry in mind. So for underwriting and pricing insurance, Resonate will offer more discrimination than the general purpose systems available in the market. With the ever increasing volumes of data and available computing power, risk models and lifestyle classifications are becoming more focused and more accurate.

With the ever increasing volumes of data and available computing power, risk models and lifestyle classifications are becoming more focused and more accurate.  Clever use of data and analytics can give companies a competitive edge, help to ensure you are not selected against and as we have seen, sometimes, lead to surprising results!

Click here for more details on Resonate or contact us at 01926 421408.

Brexit or Bremain? The results are in…

After months of debating and campaigning on both sides, the results are in and 52% favour leaving the EU.  This was actually something we predicted over a week ago when doing some analysis using our Lifestyle geodemographic classification system, RESONATE©.

The Battle

It was a closely fought battle between the Remain and Leave camps.  Earlier on in the year in February, Remain had held a consistent lead over Leave, with about 55 percent of support according to the polls.  However, the nearer it got to the big day, the more support for the Leave campaign seemed to be growing.  As the campaign progressed, it seemed that a number of factors would affect the result including the turnout, which way the 1 in 10 undecided voters would vote and the weather.

Our Poll

We conducted some analysis to find out which way people would vote and predicted a 53% vote to Leave.   We arrived at this figure by profiling every type of neighbourhood in the UK and each lifestyle category based on media reporting and analysis.  This was then scaled by the distribution of voters within each category in every street across the United Kingdom and Northern Ireland.

Our analysis indicated that the battlegrounds of undecided voters were concentrated in areas categorised as ‘Mature Families & Traditional Values’, ‘Wealthy Families in Village, Small Towns and Rural Locations’ and ‘Modern Families, Modest Means’.

The results

As we predicted by using RESONATE©, the result favoured the Leave campaign.  We put this down to a number of factors; firstly, the overall turnout was 72%, higher than the general election. Secondly, some of the areas that favoured Leave were traditional labour heartlands, ‘Blue Collar Heartlands‘ where the turnout was 80%.

We believe that this in the end was a deciding factor. The neighbourhoods more likely to vote leave outnumbered those likely to vote remain based on our database. With a very high turnout the result we predicted proved to be accurate.

RESONATE© is a classification of all households and streets across Great Britain and Northern Ireland and has grouped every neighbourhood into a number of similar categories based on a wide range of demographic, environmental, lifestyle and socio-economic data.

For more information about RESONATE Lifestyle & demographic data, contact us on 01926 421408.

BREXIT? A view on the result using RESONATE Lifestyle data

Brexit squareWith the Brexit vote about to take place this week we thought it would be interesting and also a bit of fun to use our RESONATE geodemographic classification system to give an indication of the likely result.

Looking at every type of neighbourhood in the UK we estimated which way each lifestyle category is likely to vote based on media reporting and analysis. This was then scaled by the distribution of voters within each category in every street across the United Kingdom and Northern Ireland.

The analysis seems to indicate that the battlegrounds of undecided voters are concentrated in areas categorised as ‘Mature Families & Traditional Values’‘Wealthy Families in Village, Small Towns and Rural Locations’ and ‘Modern Families, Modest Means’.

Targeted communications aimed at these neighbourhoods might have reaped better rewards for either side in their respective campaigns. The analysis predicted a 53% vote to Leave. Although a high turnout is expected, there will be variation across the geodemographic categories which has not been considered and also there will be some statistical error within this analysis. So it could still be a vote either way.

For more information about RESONATE Lifestyle & demographic data, contact us on 01926 421408.

Product Focus – RESONATE

G1-Type1 Resonate square.jpgRESONATE© is the latest analytics data product from Business Insight and was launched earlier this year.  It is a very detailed model classifying demographic, neighbourhood and lifestyle information into distinct risk categories at a highly granular level.  It is the only geodemographic classification system enhanced specifically for the United Kingdom personal lines insurance market.

RESONATE© classifies people on the demographics of the neighbourhood in which they live.  Featuring easy to understand segments and classifications, it has been built from a wide range of data sources including the latest census information and environmental risk factors as well as data relating to lifestyle and affluence.

Providing insurance professionals with a wide range of analysis options, RESONATE© consists of over 1000 different demographic clusters, ranked into relative affluence.  These clusters have then been grouped into a more easily manageable 50 distinct Neighbourhood Types that fall into 11 Lifestyle themes ranging from ‘Affluent Achievers‘ through to ‘Breadline and Benefits‘.

For example, the Lifestyle Group ‘Affluent Achievers’ makes up 7.4% of all UK households and within this group there are a number of distinct neighbourhood types such as Type 1 typically found in Kensington and Chelsea. This neighbourhood type consists of very wealthy mature families and couples, privileged lifestyles and high value homes located in exclusive urban areas and makes up less than 1% of UK households. Within the same Affluent Achievers group we also have Type 5 prosperous professional families with young children living in large modern housing. This neighbourhood would also be categorised as one of the ‘mass affluent’ segments of the UK demographic make-up with high disposable income, private schooling, large housing and highly paid professional and white collar managerial occupations being key characteristics. Type 5 represents 2.3% of UK households and can be found in high concentration in locations such as St. Albans, Wokingham and Berkhamsted.

The geographic segmentations have been developed to help analysts, underwriters and marketeers to:

  • Get another insight into risk pricing from another lifestyle and demographic perspective.
  • Understand the business’s current market penetration across segments.
  • Track product uptake trends across their customer base for future product builds and marketing offers.
  • Understand customer’s behaviour towards price in a competitively priced market.
  • Provide a risk assessment of their customers based on their claims frequency and average claims value.
  • Identify segments of higher margin/less risk customers and build strategies for retention and new customer acquisition.
  • Help offer the right products and services to the right customers and better match offers to demand.
  • Identify segments of loyal customers.
 Find out more about RESONATE© here  or contact the Business Insight team for a demonstration on 01926 421408.

Post Magazine Article: Business Insight unveils risk analysis tool

post article mapTechnology provider Business Insight has launched Resonate, a new risk analysis model that classifies every address and neighbourhood in the UK.

The tool classifies every address into a range of lifestyle categories to help improve the accuracy of risk rating, target marketing and underwriting.

At the tool’s lowest level, consumers are grouped into 1,000 different demographic clusters that can then further be aggregated into 11 lifestyle themes that range from Affluent Achievers to Breadline and Benefits.

All neighbourhoods have been grouped into a number of similar categories bases on millions of pieces of data covering a wide range of demographic, environmental, lifestyle and socio-economic factors.

Read full article here: Post Online 20 April 2015

 

Greater demographic insight is now possible with the launch of RESONATE – a new data tool from Business Insight

Resonate_LogoRESONATE© is Business Insight’s newly launched geodemographic classification of all households and streets across the UK and Northern Ireland.   Every neighbourhood has been grouped into a number of similar categories based on a wide range of demographic, environmental, lifestyle and socio-economic data.

Benefits to insurance professionals include:

  • Deeper insight into risk pricing from another lifestyle and demographic perspective.
  • Understand the business’s current market penetration across segments.
  • Model and visualise customer demographics in specific areas for more accurate policies and quotes.
  • Easily identify segments of higher margin/ less risk customers.

Read more here: Press release 25th March 2015- RESONATE