A new research study of commercial property insurance providers by LexisNexis Risk Solutions 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 industry-wide 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.
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.
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:
- 67% of respondents want a contributory database allowing multiple insurance providers to share data related to policies, properties or claims
- 53% said they thought an industry-wide contributory database for past policy data (including, for example, details of mid-term cancellations or of gaps in cover) would be extremely or very useful to their organisations
- 57% of providers said their company would be very (26%) or somewhat (31%) likely to contribute their data to a shared database
- 74% use past policy data (including details of mid-term cancellations or of gaps in cover) to support quoting and underwriting
- 64% of respondents said their current level of interest in, or need for, data enrichment is greater than in the past
Relating such findings, Jonathan Guard added that 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,” he said.
With recent reports highlighting how the commercial insurance industry is facing challenges in respect of intangible risks 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,” he concluded.