There is a “strong opportunity” for shared datasets within home insurance to help insurers better assess risk and for customers to have an easier experience, new research from LexisNexis Risk Solutions has revealed.
Currently, the number of questions asked during a home insurance application means drop-off rates can be high, especially when customers find it difficult to answer certain questions, the new study found.
68% of homeowners said they believe it is acceptable to omit or adjust information in their application to keep their insurance premiums low, while at the same time, 61% fear they might accidentally omit something in their application. Worryingly, a quarter believe that their claim should be covered regardless – even if the information they provided when they applied was not completely accurate.
As a result, insurers need to strengthen their validation processes and improve their customers’ experience by leveraging prefill at the application stage, LexisNexis has urged. Alongside tackling the problem of misrepresentation and fraud, prefill could help insurers retain more customers, according to Jay Borkakoti, director of home insurance for the firm’s UK and Ireland arm.
“A smooth and uncomplicated customer journey plays an increasingly crucial role in driving customer acquisition in the home insurance market,” Borkakoti told Insurance Business.
“The customer journey is usually the first interaction a customer has with the insurance brand and establishing trust at the initial point of contact is key. However, historically, the questions asked are pretty obscure or difficult to answer making the process clunky and long-winded,” he continued.
“The end result is that the customer either drops out of the process and fails to secure the cover they need, or hazards a guess at the responses – which raises the risk of unintentionally giving the insurer incorrect rating inputs, despite best intentions.”
Both insurers and customers alike support the idea: 85% of homeowners said they would like to see information on their property pre-filled during application, and 64% of home insurers described automatic prefill as extremely or very valuable.
However, the reality of the resources available doesn’t quite match up to the demand. Given the appetite for prefill, there is a big opportunity for more “market-wide, contributory datasets” to help assess risk, according to LexisNexis.
Historically, these have been less popular in the home space than in motor due to the increased level of fraud and the requirement for enrichment in that market, Borkakoti said.
“Any such databases that do exist in the home space tend to effectively be variations of motor solutions, which aren’t necessarily tailored for the home market and the challenges bespoke to this market. In that context, there clearly is opportunity to create something that is.”
An ideal version would hold core information on the two key components that underpin a home insurance quote: the risk assessment of the property, including geography, and the people living in it, and would be supported by additional third-party datasets, Borkakoti explained.
“Based on this data, information would automatically be pulled into the application at point of quote, making the customer’s life much easier when applying for home insurance,” he said.