New Anti-Fraud Innovations “Bear” the Truth in Auto Applications

April 7, 2025 / 3 min read

In an elaborate auto insurance fraud scheme, four people in Southern California were arrested after claiming a bear damaged their high-value vehicles. Insurance companies paid out $141,839 in claims.

However, it was later revealed that the "bear" was actually a person in a bear costume.

bear-at-car-window

New innovations from Verisk enable insurers to overcome roadblocks to identify fraudsters such as these at the point of quote, when they are applying for insurance.

Discover the power of Prior Loss Investigation Alerts, new in Verisk’s RCPOS

Verisk has introduced Prior Loss Investigation Alerts to its application fraud detection solution RISK:check^® Point of Sale (RCPOS). The solution can now include fraud reason codes for auto insurance applicants who have drawn scrutiny from Prior Loss Investigations for potential claims fraud. In addition to more than 75 fraud triggers around identity, household, and vehicle risk assessment, this innovation can provide unparalleled insights and protection in light of prior fraudulent activities.

What are Prior Loss Investigation Alerts?

Prior Loss Investigation Alerts are specialized reason codes that indicate whether a risk has a history of claims in which an SIU was called to review, investigate, or otherwise handle some portion of the claim. These exclusive alerts are sourced from Verisk’s data and support fraud detection at the point of quote.* By integrating Prior Loss Investigation Alerts, insurers can now query applications against this extensive database and identify potential fraud with greater accuracy.

Key benefits of Prior Loss Investigation Alerts:

Enhanced risk insights: Gain deeper insights into potential fraud with three new RCPOS reason codes:
- High risk: Indicates one Prior Loss Investigation Alert in the past 12 months, or two or more alerts in the past seven years
- Elevated risk: Indicates one Prior Loss Investigation Alert in years two or three
- Moderate risk: Indicates one Prior Loss Investigation Alert occurring more than three years ago
Easy integration: Upgrade fraud detection capabilities with minimal IT resources by using RCPOS Batch, or access in real time via Verisk’s LightSpeed^® API.

Why choose Verisk?

Fraud costs the U.S. insurance industry $308.6 billion per year.¹ Premium leakage for personal auto is estimated at $35.1 billion annually,² and application fraud in 2023 was 18% higher than a 2019 baseline.³ A recent study by Verisk and the Coalition Against Insurance Fraud found 32% of Americans were inclined to omit or falsify information on insurance applications.⁴

Our underwriting solutions are continuously developed and optimized based on customer feedback. The introduction of Prior Loss Investigation Alerts reflects our commitment to providing insurers with the best tools to combat fraud effectively.

Premium leakage solutions across the policy life cycle

The RISK:check suite isn’t just for point-of-sale fraud and Prior Loss Investigation Alert detection. For auto insurers still struggling with post-pandemic profitability, Verisk can assist with non-rate actions—among the fastest ways to recharge profits in the short term—including batch options requiring minimal resources from IT, underwriting, and customer service.

Verisk clients have found these auto book health initiatives can generate an ROI of 7:1 in the first year and 22:1 over the life of a policy⁵—all while helping avoid adverse selection and establish a more secure market position.

Visit verisk.com/riskcheck or contact your Verisk account executive to learn about RISK:check solutions.

*With data-use permission from the insurer, Verisk leverages non-FCRA data in a neutral database that informs underwriting and claims analytics.

^{1. The Impact of Insurance Fraud on the US Economy, The Coalition Against Insurance Fraud, 2022, < https://insurancefraud.org/wp-content/uploads/The-Impact-of-Insurance-Fraud-on-the-U.S.-Economy-Report-2022-8.26.2022.pdf >, accessed on April 7, 2025.}

^{2. The Impact of Insurance Fraud on the US Economy, The Coalition Against Insurance Fraud, 2022, < https://insurancefraud.org/wp-content/uploads/The-Impact-of-Insurance-Fraud-on-the-U.S.-Economy-Report-2022-8.26.2022.pdf >, accessed on April 7, 2025, updated with private passenger auto direct written premium from Aggregates and Averages, AM Best, 2023.}

^{3. Verisk’s Visualize: Auto Application Fraud Up 18%: New Approaches to Help Mitigate Risk, < https://www.verisk.com/blog/auto-application-fraud-up-18-new-approaches-to-help-mitigate-risk/ >, accessed on April 7, 2025., Verisk client analysis of 9.1 million applications, August 2023; first three quarters of 2023 vs. full-year 2019.}

^{4. Who Me? Joint study by Verisk and The Coalition Against Insurance Fraud, 2023, < https://insurancefraud.org/wp-content/uploads/WHO_ME_STUDY_REPORT.pdf >, accessed on April 7, 2025.}

^{5. Verisk client experience}