Analytics programme to hone insurers' targeting efforts

LexisNexis new Active Insights program collects information on consumers from 10,000 sources including 45bn public records, a database of home improvement permits issued across the US and data contributed by affiliated businesses. The data is sorted into “life events” to build a picture of individuals needs, wants, and vulnerabilities which are passed onto insurers to use to make super focused sales calls and engage with customers at the optimum time.

You're just starting work on a major home improvement project when your insurance agent calls. "You need more coverage," he says. But the real question is: How did he even know you were building an addition? Did he smell the sawdust or hear the hammer?

Neither. Thanks to a supercomputer owned by LexisNexis, the data analytics subsidiary of London-based RELX Group (RELX), your insurance company knows so much more than that.

"Very little in your life isn't known," said Victor Bayus, who runs the new Active Insights program at LexisNexis. It enables other companies to "predict, assess and manage risk."

Bayus' program allows insurers to find out as much as possible about you to market new products to you, get you to increase your coverage or, if you've done something wrong, like driving while intoxicated, either raise your premium or drop your coverage. Newly divorced? New driver in the family? Newborn baby? New business venture? You could say it knows just about everything.

Insurers themselves do this, too, but they don't know as much about you, and their methods are more obvious, such as direct mailings.

That's why they hire LexisNexis, which collects information from 10,000 sources, including 45 billion public records that tell the story of birth, marriage, home ownership and death. It also has a proprietary database of home improvement permits throughout the U.S. And with the help of utility bills, LexisNexis can tell when you move in, move out or if your house is vacant.

Businesses affiliated with LexisNexis also contribute to its bulging database. They include auto, home, life and business insurers. Even though they're competitors, these insurers all submit their data to LexisNexis for crunching.

Until recently this expansive amount of data was mostly used to verify information like a fender bender or house fire. But supercomputing -- and LexisNexis has one with more power than 4 million desktops combined -- changes the playing field and allows insurers and other companies to use "predictive analytics."

How does it work? LexisNexis sorts its data into 15 "life events" and drills down to the individual to find out his needs, wants and, yes, even his vulnerabilities, such as auto accidents and moving violations. Other life events include first-time homeownership, foreclosures and home inspections.

Then it passes this information along to insurers, which can contact their own policyholders and ask certain questions to which they already know the answers. Your insurer may even know if you're shopping for another policy.

The Active Insights brochure gives the example of a teenager who has just turned 16 years old. The insurer wants to know if he's driving, or about to, and if the policyholder plans to include him on the policy. But the policyholder could be shell-shocked by the 79 percent increase and so may start shopping for a cheaper policy.

By calling the policyholder and working with him, the current insurer is more likely to get him to retain the policy, albeit at a higher rate.

"We target customers at their point of need and engage them. We don't see this as a negative for the consumer. We want to provide a helpful answer," said Bayus. In other words, LexisNexis is trying to be both bad cop and good cop.

As an example, Bayus recounts his own experience when he got a call that someone might be using his credit card. His credit card company knew it wasn't him because it already knew his purchase history. "In that case, more information was helpful," Bayus pointed out.

The recommendation that Active Insights provides goes to the insurance company, not the consumer. And the data that determined the recommendation is locked in the supercomputer and labeled private.

"There are certain regulations that our data lives under," said Bayus. "We only provide it to insurers for their existing book of business, and if they make their customers angry, they lose business and don't get value from it. So, we give them recommended things to say."

People can change their auto or home insurer, but they can't get LexisNexis out of their lives unless they go "off the grid." When you apply for car insurance you give the insurer permission to check out your background. If you have a home mortgage, chances are that an insurer, and LexisNexis, will be watching.

LexisNexis isn't the only company vying for the top seat in the realm of supercomputing and data analytics for insurers. Credit reporting agencies like TransUnion (TRU) are also trying to gain an edge. And insurers have their own number-crunchers supplying data to their agents and salespersons.

In a world where every keystroke is often recorded, don't think for a second you can remain anonymous.