This article was provided by LexisNexis Risk Solutions
It would be fair to say that data enrichment solutions for high volume commercial lines business have failed to keep pace with those now available in the personal lines market. Despite the integration of SME commercial lines into the e-traded environment, speeding up quotes, brokers keen to capitalise on the massive upturn in business creation seen in the last year, can still face data validation challenges when arranging a quote for a small business customer.
Whether that’s substantiating a business name, director information, trading address or property portfolio, there are numerous data hurdles to jump to ensure brokers are acting with due diligence and delivering the right risks to their insurer partners. All this takes time; and in a generally lower premium, high volume market, this is money. Anything that can be done to speed up the data validation process can help insurance providers insure more risks in less time, give them a greater understanding of pricing those risks, and potentially reduce referrals along with the potential of underinsurance and fraud.
For the small business customer, a lack of verified data solutions for commercial lines can mean that the whole process of obtaining insurance can be onerous. They must invest significant time gathering information to make a ‘fair presentation’ of the risks associated with their business. In turn, rather than accepting customer provided data, time-pressed brokers must carry out their own due diligence checks; and while they obviously do their best to understand the risk presented, without a data verification solution on-tap to help standardise the process, the variations in methods from one broker to the next could be poles apart.
It’s this disparity in data validation that can all too often lead to referrals and consequently a protracted process, for the broker and the customer, let alone the insurance provider underwriting the risk.
The challenge is that there are so many elements to full validation; the business name, directors, owners and business address need to be matched against multiple datasets to create an understanding of the full risk. The business trading addresses could be a residential address, but it could also be a high street, a workshop, an industrial site, office block or large industrial site. All of these different types of addresses must be captured for commercial underwriting. If a business is trading from more than one location, more than one risk address needs to be captured. Without adequate tools for data validation, the efficiencies gained through e-trading can easily be lost.
The good news for insurance providers is that the data chasm between personal lines and commercial lines is now being bridged. It’s been a long-held goal of LexisNexis Risk Solutions to improve the data available for small business insurance providers and now it has been achieved. Commercial PreQuote is a brand-new data enrichment solution delivered through the Acturis platform or direct from our own platform. It includes LexisNexis® Property Insights, meaning that where residential property information is needed, for example for landlord insurance, brokers can validate the risk based on data about the property from year built to rebuild cost.
Brokers can also call on business data - including key information about the business, its financial position and an indicator of potential business failure, helping to provide a further layer of validation.
Finally, LexisNexis® Risk Insights is the insurance-specific customer verification and enrichment solution and this offers attributes derived from public and proprietary data, so that brokers can validate the risk related to the individual behind the business.
In one swift move, brokers can validate key details about the property, the business and the people behind the business.
Data solutions for securing small business and sole trader insurance are finally levelling up with those delivered in personal lines insurance. Automatically adding accurate pre-validated information at pre-quote will help insurance providers to tap the 5.5 billion strong small business sector in a more efficient, professional way, enabling them to assess, then accept or decline that risk to match their own risk profile. Meanwhile, pre-filling quote forms will save the beleaguered small business owner time as part of a seamless, customer-centric quote experience.
Read more: Business insurance in the UK
As attitudes to work change post pandemic, it seems likely that more people will take the plunge and work for themselves, so it’s reassuring that the insurance industry now has more tools in its armoury to support new SMEs and is more able to service these clients with insight and efficiency.
Martyn Mathews is senior director of commercial and personal lines at LexisNexis Risk Solutions. He joined the firm in October 2016 through the acquisition of Insurance Initiatives Limited (IIL).
