LONDON — The extent of the challenge that home insurance providers confront in pricing insurance accurately and reducing exposure to fraud has been revealed in a studyi of over 3,000 UK homeowners and renters by LexisNexis® Risk Solutions, the data, analytics and technology provider for the insurance sector. Two in three of the homeowners and renters surveyed felt it was fine to manipulate the truth to get a cheaper quote online, with ABI fraud dataii suggesting this typically consists of non-disclosure of previous claims.
The research from LexisNexis Risk Solutions also demonstrates that there is an urgent need for home insurance providers to know more about past claims related to the individual and the property – for use at pricing and underwriting as well as to support the claims process. This insight could become more important to help tackle any rise in fraud resulting from the pandemic and as the market prepares for the FCA’s pricing remediesiii.
The research detailed in the White Paper, A Clearer View of Claims to Help Fight Fraud, found:
Neill Slane, senior manager, claims, UK & Ireland, of LexisNexis Risk Solutions said: “Home Insurance is a highly competitive line of business with very little movement in premiums over the past seven yearsiv. Insurance providers need to differentiate themselves in pricing and claims, as well as tackle the common misconception identified in our research that they actively try to avoid paying out claims at least some of the time.
“Understanding and applying this insight has become even more important with the FCA’s new pricing regime on the horizon and in recognition of the fact that in times of economic hardship, individuals under financial stress may be tempted to exploit opportunities to commit fraud. This could be not declaring a past claim for a cheaper quote or exaggerating an accidental damage or weather-related claim.
“Fundamentally, home insurance providers need a much more granular understanding of past claims to help inform every part of the customer journey to improve pricing, underwriting and claims processing, as well as reduce fraud risks. The market-wide claims contributory database we are now building will offer that level of insight, providing the basis for building a faster, more seamless quote and claims experience, and as a means to boost fraud detection.”
About LexisNexis Risk Solutions
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 and analytics and decision tools for professional and business customers. For more information, please visit www.risk.lexisnexis.co.uk and www.relx.com.