Savan Shah catches up with Jay Borkakoti, director of home insurance UK at LexisNexis Risk Solutions to discuss the home insurance landscape, pre-filled question sets and the use of social media

What type of personal, policy and property information could be prefilled in the future to reduce the volume of questions customers face?

We know from our research that consumers are very positive about the idea of prefilled information in the home insurance application process, with 8 out of 10 saying it would make the process a lot easier. Our new home prefill solution means the homeowner just needs to validate their personal data, including their address, and then key elements of property information will be added into their insurance application for them to validate. This helps to cut the current number of home insurance application questions down. But this is just the first step.

Jay Borkakoti

As we look at the future, building data, previous insurance policy information and prior claims information can also come together to prefill other parts of the application. The more data available the more information an insurance provider has to help them rate risk more accurately and cut the application questions even further. In turn this will save time, improve the customer journey and help reduce the number of applicants who drop out. Prefilling this information also helps ensure the data is accurate and the insurance offered reflects the actual risk, helping to tackle the problem of underinsurance.

Why did you ask consumers about their social media use?

We wanted to understand more about how consumers feel about the use of this type of data. Not surprisingly, it was the younger generation who would be more willing to share this type of information. A quarter (25%) of 25-34 year olds were very comfortable to have their social media data used during the prefill process, compared to just 7% of the over 55s.

Whilst this could be down to the fact that the younger generation are more active on social media, it is interesting to note that more people aged 55 or over were ‘very comfortable’ with insurance providers using more traditional types of data – perhaps because people in the oldest age groups have more confidence that if insurance providers could access this information it will result in a more accurate price.

What benefits would a contributory database of past property claims information bring to the home insurance market?

Given the consumer appetite for prefill, coupled with insurance provider appetite for improved data sources, there is a strong opportunity for a contributory database of past home insurance claims related to both the property and the person in order to help assess risk.

Our research suggests that a majority of home insurance providers see the potential value of using contributory databases holding property information and past policy information to inform prefilling. 63% said it would be helpful to use a contributory database of property information, along with 56% who said past policy information would be helpful.

The ideal future is contributory home insurance databases accessed by the industry to help insurance providers gain a holistic view of risk. Insurance providers would be able to enhance risk assessment at point of quote, and in return, consumers would potentially receive further competitive pricing, that is more personalised to them.

Not only will the industry benefit from a shared database, but the customer journey would be greatly improved because individuals would not need to remember details like their previous claim amounts and date of the claim. All in all, a much simpler and accurate process.

Can more automation be a selling point for insurers?

When we looked into consumer perceptions about the extent of automation within insurance providers’ processes we found that over half (57%) thought insurance providers’ operations were either somewhat or very automated. Interestingly, 35% of consumers said that knowing a home insurance provider was highly automated would make them more likely to choose to buy home insurance from that company. This is most likely due to the fact that the likes of Amazon offer a world class customer journey, so individuals have very high expectations from other providers.

We believe that the research suggests that insurance providers would be wise to base marketing messages around the way they use automation, as consumers believe they will receive a better experience. Many of these perceptions could be because of a more general positive attitude towards the use of technology by insurance providers. This is particularly true amongst the younger generation; our study showed that 25-34 year olds are the most impressed by a digitised experience with an insurance provider and this is probably due to expectations of a more automated process.

Based on your research, younger consumers are much more comfortable than are older people with insurance providers using data related to their credit histories, previous insurance claims and social media activity – how can the insurance sector respond to this?

Whilst consumers of all ages were noticeably more cautious about certain data types being used to support pricing decisions, broadly speaking the younger generation were most comfortable with things like social media behaviour data being shared. This age group does expect a quicker and smoother application process and are perhaps more willing to share this information in order to achieve an improved and more personalised experience.

Understanding consumer sentiments around data use in pricing and prefill gives the market an opportunity to innovate and develop propositions for different market segments. Also, insurers should not feel intimidated to explore new opportunities as the GDPR framework will ensure good data handling.

This innovation is already happening within insurtechs and increasingly within the broader market. Consumer trust is vital to any brand in this market and while home insurance providers should be seeking to make greater use of data, technology and automated processes, they must not lose those elements of their business that help differentiate their products and services on a human level.