While many carriers continue to tackle fraud at point of claim, there’s great value to a more proactive approach, particularly at new business. Now that we’ve covered ways insurers can identify potential signs of fraud at new business, it’s time to take a hard look at assessing potential fraud through portfolio management.
The old way of doing business is becoming too expensive to maintain. As growing fraud costs become increasingly difficult to absorb, the ability to remain competitive and profitable diminishes. Examining soft fraud requires tools sophisticated enough to identify bad actors swiftly. In the past, the adoption of new tools and processes in an industry as established as insurance has been met with hesitation; however, the need for a new approach has become a necessity. The ability to quickly identify fraud at any point in the lifecycle pays for itself, so the question remains:
How much loss is enough to inspire change?
As we look at the causes and costs of soft fraud alone, it’s hard to ignore the price our industry pays for an omission or two on unchecked policies.
Rate evasion is estimated to cost insurers $16B a year.
Last year, rate evasion cost the industry a reported $16 billion. This isn’t fraud perpetrated by “sophisticated” fraud rings and felons; 1 in 10 Americans with car insurance have intentionally given false or incomplete information when purchasing a new policy — how much more inaccuracy exists as the policy renews?
The premium has been paid on time and customer-initiated changes and updates have been made, but as you check off the boxes, what information is being missed? Are you asking the right questions?
Have habitual borrowers or youthfuls been added to the policy?
Is the rated location still accurate?
Are there new or different uses of the insured vehicles?
Have new vehicles purchased by policyholders been disclosed?
Early screening without effective follow-through keeps the potential for fraud high. The majority of your book of business has likely been left out of recent updates to your new business underwriting, and waiting to react to consumer changes as they report them has been proven ineffective.
Your ability to identify discrepancies in a policyholder’s provided data is essential to decreasing exposure to fraud. TransUnion has solutions that can quickly uncover a person’s identity, most likely garaging address, undisclosed drivers, vehicle ownership and use, and vehicle history. This access to a comprehensive view of household risk can help you effectively manage fraud on your existing book of business. Using advanced analytics and decisioning technology, predictive models and third-party data help identify and classify the overall risk of a particular policyholder or group of policyholders. Allocation of resources to those with the highest fraud potential can ultimately reduce overall fraud expenses associated with investigations and payouts.
TransUnion provides an integrated view of your customers by linking traditional, trended and alternative data sets to provide a clear and holistic picture of consumers. If you’d like to learn more about verifying information on existing policies to ensure they’re accurate, up-to-date and complete, contact your TransUnion representative, email firstname.lastname@example.org or call 866-922-2100.