Property Listings Data protecting homeowners from insurance risks

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Over the past 12 months 67,000 households have turned their homes into a buy-to-let which, while offering owners the chance to boost their income, puts them at risk of invalidating their insurance.

Average rents now stand at £1,126 a month following 15 straight months of double digit growth while mortgage rates have more than doubled homeowners’ borrowing costs. It’s no wonder flipping your home to a rental is an attractive option.

What most homeowners don’t realise, however, is that this potentially lucrative venture will render their existing home insurance policy invalid. It’s a fact they’re only likely to discover upon needing to make a claim. Due to the property’s change of use – the policy is null and void leaving the homeowner without adequate insurance.

Underinsurance drives complaints

According to the Financial Ombudsman Service underinsurance is a key cause of complaints from policyholders. Only 79% of domestic property claims were accepted in 2020 and 2021, statistics from the Association of British Insurers show.

Another challenge facing homeowners and insurance providers is how to record an accurate rebuild valuation on a new policy when taking out insurance after a house move.

Set the value too high, and the customer will be overpaying for their cover, too low and they will not be adequately insured should the property need to be rebuilt. 

Hometrack’s comprehensive property data for insurance decision makers

The set of problems facing insurance decision makers can be solved using property listings data.

Listings data is the complete set of data that’s displayed when a home is listed for sale or rent now or in the past. 

Insurance firms can use Unique Property Reference Number (UPRN)-matched UK property data to improve the accuracy of due diligence undertaken on back book insurance policies while allowing providers to carry out more accurate risk assessments. 

For example, at the point a policy is taken out, insurers can protect customers from under or overinsurance by checking the home’s property sale history and other house price information within a comprehensive set of property listings data for discrepancies.

The same property data can be used to flag when a property changes status from owner-occupied to rented. This allows insurers to proactively reach out to the policyholder through their customer services teams if a change of status has occurred without notification to ensure the customer remains covered. 

Property Listings Data helping boost claims acceptance rates

The Financial Conduct Authority (FCA) will be regularly publishing claims acceptance rates of insurers as part of the Consumer Duty rules that went live in July 2023. 

With the acceptance rates of firms laid bare for customers to compare when shopping around for their next policy, firms must do all they can to reduce the barriers to getting a claim accepted. 

Firms with the highest acceptance rates, and those with proactive policies to ensure customers are not overpaying by overestimating their property’s value, will rightly earn a reputation for fairness in the industry.   

Whatever the role within the insurance sector, from actuaries and underwriters; risk, audit and compliance teams through to sales and marketing, the power of data-led decision making can help deliver accurate, faster and fairer outcomes for firms and customers.

Samantha Partington 11 September 2023
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