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In the News: Auto Insurance Fraud Impacts Consumers and Carriers

Lisa Volmar
Blog Post10/06/2015
auto insurance fraud blog

Recently I read an article about victimized New Jersey drivers who had been scammed out of auto premiums. The investigation showed a Trenton man was titling, registering and insuring vehicles for undocumented people. In the span of a year and a half, the fraudster titled nearly 100 vehicles under his name and under the names of several different landscaping companies, which he claimed to own.

Once insured, the scammer then collected money designated for insurance payments but did not subsequently make those payments to the insurance company. The defrauded individuals were left with no auto insurance and the insurance company was owed a balance of approximately $36,990.

This is an all too common story in a time when analytical tools and information exist to mitigate this type of fraud – potentially saving consumers and insurance companies millions of dollars. The answer is a verification solution to identify misinformation during the application and underwriting process in order to temper fraudulent activity. Point of sale fraud solutions are a critical new tool in the fight against insurance-related crimes that target both consumers and carriers.

In this story, victimized individuals and insurance companies were bilked out of tens of thousands of dollars over the course of 18 months – plus the added expense of investigating and documenting these crimes. Aside from the monetary loss, it surprised me to see how long this scam continued, let alone passing any application or underwriting review.

One of our most powerful tools for the insurance industry is TransUnion Risk Verification Platform, which identifies a spectrum of application issues and risks including vehicle ownership and titling issues prior to bind. Additional online digital and identity verification tools from TransUnion will further alert a carrier to suspicious applications. Point of sale underwriting is the most beneficial point in the process to identify high-risk policies.

By using predictive analytics and auto risk verification solutions to confirm identity, garaging, drivers, vehicle and ownership information, insurers can identify fraud before it leads to costly losses for innocent consumers and carriers alike. Risk Verification Platform fights fraud by giving carriers and agents the tools and information needed to review and verify high-risk applications where the information provided triggers a possibility of fraud, rate evasion or other misrepresentation.

In this case, the fraudster was ultimately sentenced to prison for second-degree insurance fraud. But it was way too late. Increasingly, consumers are realizing insurance fraud raises rates for honest policyholders and are demanding insurance companies do more to combat fraudulent activity. Auto insurance fraud persists, but it can be identified earlier in the process. Combating fraud at the point of sale is the first step to allow carriers to make better use of their resources and quoting expenses, while making more informed decisions. It’s the solution that will help carriers avoid more cases like this one, while giving them the power to provide the best rates to honest customers.

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