Data and analytics top the priority list for U.K. commercial property insurers

29/6/2017

Managing profitability and intense price competition are the biggest challenges in the commercial property insurance market today.  While smart building technology along with automation and digitisation were named by commercial property insurers as key trends,   the top ranking priority for commercial property insurers is investment in data, analytics and technology.  These are the findings of a comprehensive study¹ of the UK commercial property insurance market, detailed in a new report ‘Taking the Pulse of the Commercial Property Insurance Market: Future Challenges, Priorities and Trends’, from LexisNexis Risk Solutions.

The report looks at current views on the challenges and priorities, as well as the top trends shaping the commercial property insurance industry. It examines how digitisation is affecting UK commercial property insurers, the risks and opportunities, and the value of using data, analytics, and contributory databases.

The LexisNexis Risk Solutions study of the UK Commercial Property Insurance Market found:

•  Taking better advantage of data/analytics/technology is a key priority for 81%
• 78% ranked managing the risk profile of their book as a key area of focus
• 40% of commercial property insurers find managing profitability a significant challenge in the current market, and 78% named it as a key priority
• 30% are struggling to manage the increased price competition
• 78% expect smart building technology to positively impact risk mitigation
• 81% see contributory databases playing an important role in the future of their market
• Only 21% rank enhancing the customer experience as a significant challenge, reflecting the broker driven nature of the market

Andrew Lowe, Business Director, Commercial Insurance at LexisNexis Risk Solutions UK and Ireland, said: “It’s clear that managing profitability and pricing competition is a significant challenge for UK commercial property insurers but it is very encouraging to see that taking advantage of new technology, data and analytics is a primary focus for the industry. This will enable them to leverage the efficiencies of digitisation throughout the customer lifecycle.   Indeed, insurers told us they see the biggest opportunity from digitisation in operational savings, access to new markets and speed to market for new products.” 

In the study, almost half (49%) of commercial property insurers see smart building technology as having a notable impact on shaping the industry in future. The new generation of smart building technology, apps and gadgets enables unprecedented connectivity within the workspace, offering ease and convenience as well as protection – with technology such as motion sensors, smoke detectors and water leak detectors. As such, 78% of respondents expect smart building technology to positively impact risk mitigation, and 83% expect insurers to utilise this technology in the near future.

Lowe continues: “Smart building technology has the potential to shift commercial property insurers’ business model away from claims pay out after an event, to preventing the event – and the claim – in the first place. This could enable commercial property insurers to become proactive risk managers.

“The use of data and analytics is transforming the industry as a whole, helping insurers price more accurately and quickly, reduce operating costs and develop new business models.  In the commercial property market, it is enabling operators to grow their business and meet continued challenges such as increased price competition and more frequent severe weather events.  Even so, this is still a relatively untapped area, and there are tremendous opportunities on offer for those insurers ready to embrace change and capitalise on data and analytics, data enrichment as well as the potential data from smart building technologies and digitisation as a whole.”

About LexisNexis Risk Solutions

LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit LexisNexis Risk Solutions and RELX.

1 Research Methodology. Using a mix of online panel and telephone interviews data was collected from 63 commercial property insurance professionals, who all answered questions specific to their insurance line. To take part in the survey they had to spend at least 30% of their time in underwriting-related activities. The results showed that the majority of respondents spent over 80% of their time pricing and underwriting policies. LexisNexis was not identified as the sponsor of the study (conducted 8th December - 9th January 2017).