Market wide claims data can help tackle application fraud

Neill-Slane,-Senior-Vertical-Market-Manager,-Claims,-Insurance,-UK-&-Ireland,-LexisNexis-Risk-Solutions

Authored by Neill Slane, Senior Vertical Market Manager, Claims, Insurance, UK & Ireland, LexisNexis Risk Solutions

The annual fraud figures from the ABI has underlined the valuable role data enrichment has to play in assessing risk and detecting fraud at the application stage as well as the huge potential of centralised claims databases for use at quote and at claim.  We’re starting to build that database for the home insurance market right now, with a plan to roll out motor and commercial claims databases in 2021.

The figures from the ABI on the volume of fraud in the insurance sector revealed that improved prevention measures and better reporting reflected a significant increase in the volume of application fraud detected, up over 200% on the previous year to 760,000 cases, worth £1.4billion. Application fraud typically includes non-disclosure of previous claims.

As well as understanding whether a customer had a prior claim or not at the point they apply for insurance, our home claims contributory database will allow the insurance provider to understand the specifics of the claim, when it occurred and how much it was settled for.  Building this greater context and understanding of past claims can enable the market to make much more informed decisions for pricing, renewals and MTAs.  Bringing this data in at point of claim may also allow providers to understand how a new claim ‘fits’ with what may have happened in the past and inform the potential treatment strategy for the current claim.

For home and commercial property insurance, prior claims for the property also need to be considered – for example past damage to the property from windstorms, escape of water, flood.  How often has this happened?  How much did each claim cost?  This data could be valuable in understanding the risk profile of your customer base and in driving the development of new propositions that actually help policyholders mitigate the risks.

Claims data only increases in power when combined with public records data, and property data, helping build a better picture of both the customer and location at the point of quote and claim, to deliver appropriate premiums and help reduce the market’s potential exposure to quote manipulation and claims fraud.

These factors combined with the changing risks created by the pandemic, have highlighted the increasing importance of building the most comprehensive view of the applicant, giving insurance providers greater confidence that the price they quote is right for the risk.

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