A study of digitisation in the UK motor insurance sector by LexisNexis Risk Solutions1 has found that only 18% of the insurers surveyed believe the industry is fully prepared to manage digital risks, dropping to 14% for those who regard their own organisation as being very prepared.
In the report, ‘Facing up to the challenges of digital risk’, UK motor insurers were asked to name which risks they saw as most challenging. Email Security and Data Protection, as well as Identify Theft, topped the list for insurer concerns at 35%, followed by Cyber Crime at 27%, Connected Technology and Social Networks at 26% and malware spread at 16%. This response reflects the huge volume of online transactions in this sector of the market and the constant threat of fraud, highlighting the importance of data used for accurate verification at point of quote as well as industry concerns over the protection of personal and behavioural data through connected technology. Core to providing value for consumers are transparency and good data management practices. Insurance providers should be working with partners who are experienced in the applicability to process personal data disclosure, and data quality management with minimal risk.
Overall, 89% of the personal motor insurers surveyed see emerging technologies and digitisation as a challenge. 42% have already faced operational challenges as a result of digitisation, 40% have encountered price competition and a further 40% have faced data protection challenges. However, just over a quarter (26%) have not confronted any of these issues.
Selim Cavanagh, Vice President, Insurance UK and Ireland at LexisNexis Risk Solutions said: “The motor insurance market is undergoing major changes and challenges – not least from agile InsTech start-ups that are seizing the digital advantage over more traditional operating models. Advances in data analytics are enabling insurers to understand and segment customers more effectively and make more informed risk decisions. It’s clear that the opportunities through digitisation are huge and now is the time to set in place robust strategies to deal with the emerging digital risks.
“Overall the report has highlighted the importance of planning for digital risk and the need to ensure that future offerings are robust and agile enough to deal with a range of threats if or when they strike. At LexisNexis Risk Solutions, we are able to help insurers manage and minimise risk through best practice protocols for data analytics and best in class security standards.”
Research Methodology. Using a mix of online panel and telephone interviews data was collected from 55 motor 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 January 2017).
LexisNexis® Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. 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.