No claims discount database to go live with major insurers on board

Nearly half the motor insurance market has signed up to use LexisNexis’ no claims discount database, which eliminates the need for insurers and brokers to check proof of a customer’s no claims history.

The database, which goes live next month, will initially be used by insurers and brokers that account for 45% of the UK motor market after the policy has been sold, as a substitute for asking customers to send written confirmation of their no claims history.

“We’ve presented a better, cheaper and more accurate way to do it,” said LexisNexis Risk Solutions UK managing director Dan Marshall.

Next year LexisNexis expects participating companies to use the information at the point of quote. Insurers are currently investing in the IT upgrades needed to use the no claims discount (NCD) at quote stage and will collect data for a period before deciding how it will influence their rates.

NCD data is only available to companies that contribute information about their customers.

As well as rooting out fraudsters, the database includes information that will help assess a risk by revealing discrepancies between what a customer says and their history.

Knowing the customer is seeking a quote well before their existing policy is due to expire, for example, could indicate that they expect their no claims discount to be reduced imminently.

And if an applicant has lied about their NCD, it will reveal the extent of the exaggeration.

“There is a correlation between mis-statement of no claims discount and frequency of claims,” Marshall said.

Companies already signed up include Direct Line Group, Zurich, Esure, Markerstudy, Hastings Direct and BGL Group, and discussions are ongoing with Admiral, AXA Direct, Swiftcover and Tesco Underwriting. 

“We genuinely think this is a breakthrough. We’re not aware of any significant insurer who’s committed to go elsewhere, not of any insurers who have decided not to come to LexisNexis,” Marshall added.

“We have developed a solution which will be available to both brokers and insurers at the time of quote, creating a significant advantage over rival solutions. Our high contribution rates at launch testify to the quality of the product we will deliver and the trust we have built with insurers, brokers and intermediaries in the market.”

Zurich’s UK director of personal lines underwriting and pricing Gareth McChesney said: “This new service is a significant step forward for both the motor insurance industry and consumers. Automated checks should help insurers and brokers to reliably reduce fraudulent insurance applications and remove cost and hassle for customers.”

Gary Humphreys, group underwriting director for Markerstudy Group, said: “We can see this technology being a significant step forward both for the industry and consumers.”