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HomeProtect: Improving home insurance pricing and reducing claims

  • We were able to drop the price of 80% of new quotes and for the remaining 20% we were able to price more accurately’

    Neil Huzinga, Chief Product Officer

Avantia Group is a regulated financial services technology and analytics business that owns a growing stable of successful and profitable B2C general insurance consumer brands. The group seeks to use insight to provide intelligent services to their customers.

Neil Huzinga, Chief Product Officer, Home Protect

HomeProtect, Avantia’s home insurance brand aims to provide ubiquity, ‘we quote for everyone’ says Neil Huzinga, Chief Product Officer. HomeProtect can provide 97% of UK households with a quote online and a further 2.6% of households are able to get a quote over the phone; covering over 99% of the market – over a third more than the large insurers are able to provide.

The problem

As the Statement of Principles (which meant that those living at risk of their property flooding were largely protected by a combination of the Government and the insurance industry) was coming to end at the end of June 2013; insurance providers had to make sure they had taken evasive steps to ensure they were protected, in the event a new agreement with the Government couldn’t be reached. Avantia’s goals were clear, they sought to offer long-term, sustainable prices to those households at high risk that needed cover. Neil adds: ‘we needed to find a way of generating income at the right level for our insurer partners; with the aim of getting the right price for every customer.’ However there was a lack of accurate data available, especially when it comes to property level pricing for flood insurance cover.

The solution

Avantia approached Ordnance Survey to use AddressBase Premium which provides an accurate location for more than 30 million addresses across Great Britain. In the most recent step forward, AddressBase is pre-processed by Airbus Defence and Space against the flood model score Avantia receive from JBA,and used in the ‘Neptune Project’, a flood-rating algorithm built by Avantia and added to its already sophisticated underwriting system. The algorithm uses the Unique Property Reference Number (UPRN) to identify the correct flood risk for each individual property.

We like to believe that our customers living in the highest risk areas are better-prepared by being with us, as we work with them, alongside hydrologists, when underwriting the policy to help them understand the preventative measures they can take

Neil Huzinga, Chief Product Officer

Avantia also make use of Airbus Defence and Space’s Terrasure platform which utilises OS MasterMap Topography Layer and aerial photography for visualisation of dwellings in high risk areas that combines JBA’s Comprehensive Flood Model and subsidence risk. Avantia chose Ordnance Survey because of the detailed data it provides, as well as the support they received from their account manager both during and after the decision-making process. Not only that, but it was also important for Avantia to go to the original, trusted source of the data, especially when using such a new, detailed dataset.

The benefits

The benefits to HomeProtect’s end customers were clear; as soon as Neptune went live ‘we were able to drop the price of 80% of new quotes and for the remaining 20% we were able to price more accurately’, enthuses Neil. The result is that since using AddressBase in Neptune in March 2013, comparing the 40,000+ new business policies written with the business prior to that date, the flood claims frequency seen on that new business during this winter’s harsh weather was 1/20th of that experienced on Avantia’s existing book. ‘We like to believe that our customers living in the highest risk areas are better-prepared by being with us, as we work with them, alongside hydrologists, when underwriting the policy to help them understand the preventative measures they can take’, adds Neil.

The future

Neil is excited about what further elements AddressBase Premium can provide to both improve pricing but also drive marketing. Avantia has built a business with consistent and sustainable growth and profitability by using technology to rate residential property risks in a more accurate and cost efficient manner than the rest of the market. But it doesn’t stop there. Neil says: ‘one of our goals this year is improving the customer journey by reducing the number of questions we ask at quote stage’. We’re also looking at further reducing the number of referrals to our underwriters in the call centre’, Neil adds. ‘Our vision is for Avantia to become technology leaders through better analysis of our own existing data, and combining these with third party datasets such as those provided by Ordnance Survey to deliver further insight’, Neil concludes.

The products used

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