LONDON - A new research study of commercial property insurance providers by LexisNexis Risk Solutions[i] has identified a clear appetite for a centralised data exchange comprising property information, policy history and past property claims data from across the market to support quoting and underwriting activities. However, while the majority of those surveyed would like access to a contributory database, only just over half of the respondents in the study would readily contribute. LexisNexis experts saw this same hurdle among personal lines insurers who now benefit from industrywide data sharing.
The study found an increasing need for data enrichment amongst commercial property insurance providers with 64% saying this interest has increased in the past year. Almost all (99%) of the commercial property insurance providers surveyed use some form of location-based data to enrich quotation and underwriting processes, with flood and fire data used most often. Visualisation tools such as LexisNexis® Map View have played a key role in helping property insurers understand environmental risks. Furthermore, three out of four commercial property insurance providers (74%) currently use the past policy data they hold to enrich the quoting and underwriting processes.
Although close to seven out of ten of commercial property insurance providers (67%) would support a market-wide centralised contributory database through which insurance providers could share policy, property and/or claims data, only 57% of the commercial insurance providers surveyed would be very or somewhat likely to contribute to such a database.
The LexisNexis Risk Solutions study of the UK Commercial Property Insurance market found:
Jonathan Guard, Director, Commercial Markets, LexisNexis Risk Solutions, UK and Ireland, said: “Contributory databases are already common in the personal lines market – close to 90% of the motor insurance market currently contributes to the No Claims Discount Module. However, data sharing is a relatively new concept in commercial insurance and this is reflected in the response we received regarding how ready and willing insurance providers were to actually share their claims and policy data.
“There is a clear recognition among commercial property insurance providers of the potential value that contributory databases could deliver, such as data accuracy, efficiency and identifying blind spots in commercial risk, but there still seems to be some caution when it comes to sharing their own business data. Perhaps we should not be surprised, as data is hugely valuable to insurance providers, so both an eagerness to obtain more of it and a reluctance to share it are understandable responses.
“The solution would be a contributory database that delivers so much value that it would alleviate concerns over sharing their own data. We found that personal lines insurance providers shared these doubts until they tested contributory databases and saw how much the benefit outweighed their concerns. With recent reports highlighting how the commercial insurance industry is facing challenges in respect of intangible risks[ii] it makes sense for commercial property insurers to collaborate and leverage data to help mitigate the tangible property risks they underwrite.
“Commercial property insurers are already utilising their own customer policy history and claims data, so sharing this data across the industry is the natural next step. A shared claims and policy history database would benefit all who contribute, but there will still be plenty of scope for insurance providers to use data and analytics to differentiate themselves and prosper in this dynamic, ever-evolving part of the insurance industry.”
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.
[i] Research Methodology. Using a mix of online panel and telephone interviews data was collected from 77 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.