Spot on

Insurance has, for many years, been viewed as a necessary, though largely unwelcome, commodity that consumers only interact with when they absolutely have to – a reality that resulted in considerable complacency among providers.

However, trends are converging to change that, and not least among them are demands from an increasingly savvy, and progressively younger, customer base. That’s coupled with a challenging economic marketplace, following a global pandemic that has forced businesses of all types to improve efficiency and get better at acquiring and retaining users, and offering an overall better experience to them. On top of that is the need to manage the growing threat of fraud.

Here, Barley Laing, MD at global identity and data verification service provider Melissa’s London office, describes how its pioneering development of geocoding technology is supporting this cultural shift.

Founded in 1985, Melissa now serves 30,000 customers worldwide, including heavyweights like Bank of America, Citi, Aviva and Volvo Financial Services.

It provides a range of tools and services that offer alternative solutions to the verified postal address. Anywhere in the world that has a verified postal address can be geocoded.

Address is part of the fundamental background data for insurers, and geocodes enable them to plot exactly where a property is and, in doing so, helps them assess the different types of risk that might apply to contents or valuables kept there. They can then come up with a very precise premium that suits the location.

Taking the UK as an example, there are different geographical factors, such as flooding, cliff erosion for coastal properties, or high-crime-rate areas. Using our very specific co-ordinates, insurers can precisely judge those risks. As a global operation, we can also apply geocodes to things like volcanic eruption, which we’ve seen in the past few years in Italy and Iceland, for instance. Or to places experiencing excessively high winds, even to areas where there is armed conflict.

Large-scale, global insurers might run geocoding quite frequently, to establish the changing nature of risk and adjust their insurance policies and premium profiles accordingly.

Industries like insurance used to apply a one-size-fits-all approach to premiums.

Geocoding technology is helping improve customer service, reduce risk and improve efficiency for insurers. Barley Laing, MD at global ID and data verification provider Melissa’s London office, explains how

challenges of anti-money laundering (AML), fraud protection and the identification of politically-exposed persons, among other enterprise-wide risks. It does this through age verification, national ID services and contact data validation. However, it’s Melissa’s cutting-edge development of geocoding technology that offers a potentially exciting new solution to a number of longstanding conundrums in insurance.

THE INSURTECH MAGAZINE: Can you describe Melissa’s geocoding technology and why you’re so excited about it?

BARLEY LAING: It’s the process of appending geocodes, or longitude and latitude, rooftop geo-coordinates to a

Spoton!

Now, the markets are fracturing, becoming more focussed on individuals, and there’s a lot more personalisation going on. So, using geocoding to understand the geographic factors better, also enables insurers to market certain types of policies, and secondary insurance products, to other people in that cluster.

TIM: What implication does this more accurate, automated process have for know your customer (KYC) and anti-money laundering (AML) compliance compared to traditional onboarding practices?

BL: You have people applying for insurance policies many, many hundreds of thousands of times globally at any point in time, and it’s critical, at that moment of engagement, that the insurer firstly makes the process as simple as possible for the customer. Any automation they can apply, at that touchpoint, will help ensure the customer ends up taking a policy.

A good example of this kind of automation is auto-address lookup. Most people now use mobile devices to enter address information, and 20 per cent of data that is entered online has inaccuracies. By automating the process, you prevent such mistakes. The user is asked to put in a postcode and is presented with the best matches of addresses for that postcode, then selects their address from a dropdown menu, which is auto-populated into the web form. This is not only really important for insurers, but the customer journey is also improved because these automated tools reduce the number of keystrokes a customer has to make by up to 70 per cent.

Even then, though, you’re only capturing verified information at the first point of contact, then applying that to the rest of the lifecycle. The issue insurers, like other markets, face is that data degrades over time. People marry, move, change jobs, die, and all of these elements of data that underpin their insurance policies, are in a constant state of flux.

Ninety per cent of organisations tell us that data quality is a real issue for them. They may have captured good data to begin with, but we expect two per cent of that data to degrade every month, and, when you round that up over the course of a year, you get to a point where nearly a quarter of their database may have inaccuracies in it. If the data is inaccurate, what does that mean for the policy that is still live with that customer? Is the risk profile the same as when they onboarded?

Onboarding with strong KYC and AML processes is an absolute necessity, but the key for insurers is to make sure they refresh their data over time, as often as they feel is reasonable for their particular business.

This can help address fraud, too. When someone speaks to an insurer, they have a lot of qualifying questions, and companies are very keen to establish that the information they have gathered is correct. Geocoding, applied to a verified address, helps to limit the potential for fraud, because knowing precisely where a customer is, on a geographical basis, allows the insurer to determine factors that an individual may not necessarily discuss during a phone call, or on a web form.

TIM: What about the complexity around different regulatory onboarding requirements in different jurisdictions, like BaFin in Germany?

BL: Geocoding is a big win in terms of this. There are probably four billion addresses worldwide, and that information is changing on a second-by-second basis.

There are probably four billion addresses worldwide, and that information is changing on a second-by-second basis… if the data is inaccurate, is the risk profile the same as when a customer onboarded?

So, while insurers can buy some address data and build a system in-house, working with a specialist like Melissa can ensure postal address data remains up-to-date.

Melissa has an encyclopaedia of more than 240 country address formats (all the countries in the world). We multisource our reference data for each of them and enable address standardisation between those different formats. We constantly update the information, so insurers are only ever accessing the most contemporary data, allowing them to get on with selling policies and keeping customers happy.

TIM: What other advantages are there for the business in keeping data reviewed?

BL: Data is one of insurers’ most valuable assets, and it takes some looking after. As I’ve said, it’s not just about the point of entry, but also the ongoing improvement, correcting, and making sure their customer database is as fresh as possible.

This means they’ll have each customer’s up-to-date postal address, their verified email address and phone information – effectively a multichannel way of accessing their customer, so they can reduce their risk of losing them by communicating with them in the way and at a time the customer wants them to.

With a precise address, you can also add other determining factors, like demographics, and pull out, from a customer name and address, if, for example, they’re married, if there are children in the family, and get an understanding of the household income. All of those things can be good ways of assessing what potential there is for sales of additional financial products and services.

TIM: And are there benefits for customers, too – now and in the future?

BL: We’re seeing insurance companies move towards offering more than just insurance products, and the more they understand their customer, the better able they are to do that appropriately. They can improve that customer contact by applying different suppressions to the database. If companies apply movers and goneaways to their address database, they can keep in contact with them, and hopefully still provide them with insurance policies.

But it’s also a question of not damaging the customer relationship and brand reputation. There are things like deceased persons flagging, for instance. People pass on and it’s really important – to protect the family’s and friends’ feelings as much as anything – that insurers don’t make the mistake of continuing to try to communicate with that person. They can only ensure that doesn’t happen by applying the correct suppression technologies, and that can only be done if they have the correct address data, with a geocode, in the first place.

All of these things enable firms to operate as efficiently as possible, ensure a better customer experience and make each insurer more competitive in their market. After all, there are plenty of alternatives out there for customers to look at, so insurers need to be on their front foot. It’s no good relaxing.