Using Predictive Analytics to Detect Property Fraud

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Current estimates show that an increasingly high number of property claims are fraudulent, with most going undetected. With the rate of new mortgages rising, we see a clear need to make better-informed decisions in the underwriting process.

Property insurance carriers are turning to new tools to validate identity and occupancy information and mitigate the possibility of fraudulent property claims from the start.

Point of sale underwriting is a critical time to identify high-risk policies. By using predictive analytics and property risk verification solutions to confirm occupancy and ownership information, insurers can identify fraud before it leads to costly losses.

Regardless of channel, verification of application data is key to developing the most accurate premium. Identification of address discrepancies at the point
of sale helps reduce premium leakage and improve profitability. With property fraud on the rise, it is critical to focus on fraudulent identity and occupancy information at the point of sale.

The first step is to validate consumer-provided information correctly to make better-informed decisions. A policy can only be as strong as the data it is built upon. To write homeowner policies accurately, a risk verification solution is vital to flag possible misinformation.

Analytics from the TransUnion Property Risk Verification PlatformSM solution have shown we can classify 5% of new business policies as “high risk” from an occupancy, identity, mortgage, property or insurable interest perspective. These risks have 1.5 to 2 times the loss ratio relativity compared to the less risky 95%. A current TransUnion customer who implemented this solution was able to identify three times the claims frequency in the high- and medium-risk groups. As these results show, carriers who implement property risk verification can accurately identify more policies with the highest potential for claims.

Property risk verification solutions help predict which policies are at the highest risk for fraud. Carriers receive notification at
the point of sale if an applicant’s identity, address, mortgage or property information triggers a possibility of fraud, unauthorized transaction or other misrepresentation. At this point, a property insurance carrier can decide whether to verify the flagged information with the applicant and ultimately make an informed decision to process the application without the changes, uprate the quote, or reject it entirely.

For more actionable insights to detecting and mitigating fraud at the point of sale, download Predictive Power for Property Insurance Carriers now.

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