How UK insurers are using public credit data to enhance pricing, mitigate insurance fraud and pursue growth during the cost of living crisis

TruVision Public Data Score

As the cost of living crisis deepens and the UK faces the highest inflation rate in decades, households are experiencing the most significant reduction in disposable income since records began.

With less spending power and rapidly rising costs, many consumers’ spending habits are changing; some are looking to cut down on unnecessary purchases, others are looking to spread payments over time, and still others are being pushed to commit more extreme acts, such as first-party fraud.

These changes in consumer behaviour will have a profound impact on the UK insurance industry, raising a key concern for many insurers: how to rate effectively and secure growth in an increasingly competitive market.

In this blog, we discuss how UK insurers are using public credit data to enhance pricing, mitigate insurance fraud and pursue growth during the cost of living crisis.

The advantages of public credit data for insurance quotations

In recent years, public credit data has been overlooked for its value within the insurance industry despite it being used by most providers. Its popularity and widespread use has caused many to overlook its potential as a key enrichment factor in insurance rating.

Unlike private credit data, public credit data can be utilised by insurance providers to enhance policy pricing with insight that has never been more valuable as inflation sends costs spiralling.   

With this in mind, the benefits of public credit data cannot be underestimated, which is why TransUnion has developed the TrueVision Public Data Score  — a powerful score designed to help insurers make better-informed quotation decisions.

What is TrueVision Public Data Score?

Specially designed for the insurance industry, TransUnion TrueVision Public Data Score is designed to help insurers and brokers improve their quotation prices.

This powerful score uses the most up-to-date data from our credit and risk product, TrueVision. The score is calculated using predictive public data assets like credit searches and demographics data, including applicant age, postcode, council tax bands and electoral register information.

TrueVision Public Data Score can help insurers and brokers reduce risk and improve pricing models with:

Increased predictive power 

The score is better at identifying riskier applicants than previous public scores — with an uplift of 13.7 Gini percentage points (compared to our Gauge 1 score) and 9.5 Gini percentage uplift (compared to our Gauge 2 score). 

Improved data science 

The score is created and maintained by our skilled data scientists, drawing on decades of experience working with the insurance market across the UK and internationally. 

Minimised credit file impact 

Using our public data leaves only a ‘soft’ footprint on a consumer’s credit file. Soft footprints are only visible to the consumer and do not impact their ability to obtain credit. 

Omnichannel access 

We integrate the data into the LexisNexis data distribution hub for point-of-quote transactions through all aggregator distribution channels.

How TrueVision Public Data Score can benefit consumers, insurers and brokers in the UK

With the UK now in an economic recession and consumers experiencing a drop in real wages, the cost of living crisis has already had a significant impact on UK insurance providers. With fraud on the rise and market competition intensifying, TrueVision Public Data Score can help insurers and brokers overcome these hurdles by:

Enhancing insurance risk pricing models

With the recent amendments to the General Insurance Pricing Practices Regulation, there has never been a more important time for insurers to ensure their pricing is competitive enough to win at point of application, which will prove vital for insurers looking to secure profitable in-year growth.

As household budgets are put under pressure, many consumers are looking to spread payments further, and the demand for premium financing looks likely to increase. To stand out in an increasingly crowded market, insurers must be able to rate effectively and with confidence at point of application. TrueVision Public Data Score can help achieve this by utilising credit search data to provide increased match rates and accuracy, helping providers identify consumers who may be more likely to default, have existing bad debt, or pose a higher risk of cancellation.

For more information on how TrueVision Public Score can help you enhance your risk pricing models, contact a member of our specialist team.

Reducing the impact of fraudulent insurance claims 

Insurance claims fraud rose by 13% in 2021,[1] with the cost of the average fraudulent insurance claim rising to £12,000[2] — a cost that affects both the insurer’s bottom line and the premiums of genuine policyholders.

This significant increase in fraud impacts almost all types of insurance, particularly those in motor insurance who are seeing a sharp rise in ‘crash for cash’ claims, and those in home insurance who are experiencing increased volumes of false fire and water damage claims.

The rise in dishonest claims is fuelled not only by seasoned fraudsters, but also consumers who are struggling under financial stress triggered by the cost of living crisis.

Despite this increasing trend, TrueVision Public Data Score can help insurance providers mitigate the impact of fraud by appending their customer databases onto public data. This allows insurers to better identify customers who pose a high credit risk — so appropriate action can be taken by the insurance provider. 

For more information on how TrueVision Public Score can help you reduce fraud risks, get in touch with a member of our insurance team.

Improving customer retention: reducing cancellations, lapse and persistency

Acquiring a new customer can cost up to five times more than retaining an existing one,[3] making customer retention a priority for most insurance providers.

With economic pressures intensifying, insurers across many industries are experiencing higher levels of cancellations and persistency, with many consumers shopping around for cheaper quotes prior to renewal, and others opting not to purchase insurance at all.

TrueVision Public Data Score can help insurance providers overcome these challenges by effectively identifying concerns in existing back books. This information can then be used to offer enhanced, personalised pricing, support customer duty considerations, and improve renewal rates to reduce persistency moving forward.

For more information on how TrueVision Public Score can help you improve customer retention, contact a member of our specialist team.

Why act now? The value of TrueVision Public Data Score 

After years of turmoil, the UK economy shows few signs of settling down, resulting in prolonged financial uncertainty for many consumers. With many already struggling with inflated costs, the impact on insurers will be profound and long felt.

At a time when fraud is increasing and pricing has never been so important, insurers must use every tool in their arsenal to price effectively, helping them retain existing customers and win new ones.

Ultimately, insurers that don’t recognise the value of public data could be opening up their businesses to unnecessary fraud, claim and debt risks. Whereas those embracing the value of public credit data could be better placed to rate effectively, mitigate fraud and secure growth.

Why TransUnion?

Supporting insurance providers across the UK and internationally, TransUnion is a global information and insights company that uses data, software and technology to make trust possible between businesses and consumers in the modern economy.

Unlike other bureaus, we have a dedicated insurance arm made up of specialists who understand the particulars and complexities of the industry — and can help you leverage data to achieve your business goals.

In fact,  we’ve invested heavily in personnel, footprint and product development to offer a consultative service that works hand-in-glove with your business needs, rather than simply seeking to satisfy any tactical requirements.

For more information on how TrueVision Public Data Score can help you, why not book one of our Innovation Labs? Designed to help you access our Data Science and Analytics capabilities, we can combine your data with TrueVision Public Credit Data to create custom scores and produce even more powerful results.

[1] Aviva Newsroom

[2] ABI, Oct 2021

[3] Outbound Engine

If you’re a consumer with questions or issues related to your personal credit report, drivers history report, disputes, fraud, identity theft, credit report freeze or credit monitoring services, please visit our Customer Enquiries page for assistance.

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