CFC’s Graeme Newman on data and winning in commercial

When it comes to buying insurance cover, everyone wants the same thing – to be able to buy their policy quickly and with as little friction as possible. However, for insurance providers, addressing the enormous asymmetry of information between the buyer and the seller has meant this has been a tough nut to crack.

Over the last decade personal lines insurers have made massive progress.

Simply plug your vehicle registration number into a website and most mainstream motor insurers will enrich data from the DVLA and other third-party sources to fill in your application form.

Streams of data taken from telematics devices, including mobile phone apps, can even provide real-time changes to pricing and alterations to cover. Insuring the family car has never been easier.

But the world of commercial insurance has been stubbornly slow to follow.

Prospective customers must wade through hundreds of ambiguous questions, generally set out in antiquated application forms that differ subtly from insurer to insurer.

Astute underwriters balance the received wisdom from their elders with a finely tuned gut feel in order to turn these answers into bindable quotations (while carefully tucking the application form into their top drawer in case they are ever asked to justify their selection).

The process of buying commercial insurance is often a far cry from the data-driven, frictionless experience our customers expect.

But it doesn’t have to be this way and the ultimate winners in this sector will adapt the practices of the personal lines market to deliver a far easier and better buying experience for its customers, while driving better loss ratios through more informed underwriting.

Truth

The argument that I often hear from commercial insurers is that there simply isn’t enough data available to be able to price and select risk in this way. But the truth is that every business, no matter how big or small, has a far bigger digital footprint than you might think.

Those best able to mine that information will ultimately win in this new data-driven arms race.

It’s remarkable how much information you can learn just by analysing a company’s domain name. Using open-source data sets and publicly available information you can accurately capture key data points such as their registered office address, main trading locations, principal business activities, company structure and key personnel.

Using simple technical analysis you can enumerate their wider digital footprint and build a detailed understanding of who they are, how they trade, and even how secure they are.

But even if a business doesn’t have a website, there’s still plenty you can learn.

With over half the world’s population holding at least one social media account, you can learn a lot about even the smallest sole traders or consultants.

From their Linked In profile through to Glassdoor reviews, increasingly businesses play out their lives in a highly visible, very public way. For those that care, it’s possible to glean a huge amount of information in an incredibly short space of time … without asking a single question of your prospective customer.

Pressure

Business owners will demand the same experience when it comes to buying their commercial insurance that they have in buying cover for their car – and the pressure they will be putting on their brokers will translate into pressure on insurers to deliver.

Those who fail to take advantage of the extensive digital footprint that companies now leave in order to understand them and make faster, smarter underwriting decisions will simply get left behind.