Whether it’s a motorist taking out a new insurance policy or making a claim, trust is a key factor in the process and any misrepresentation of material facts, either deliberate or accidental, can create serious challenges for the insurer.
Misrepresentation or non-disclosure by the policyholder or claimant may be completely innocent, but it may also be a deliberate attempt to hide relevant details in order to pay a lower premium or potentially receive a higher claim amount than is justified. Irrespective of the reason why the correct details have not been provided to the insurer, it highlights the shortfalls in relying solely on customer-submitted information.
The use of data – either internal or external – can help insurers get the information they need. It can not only help identify potential fraud, but also shorten the customer journey by validating information more efficiently.
Verisk Ireland offers a whole suite of data enrichment services that quickly and easily provide insurers with access to external data. These services are used at the underwriting or claims stage, whether that be for quotation or policy inception, mid-term adjustment, renewals, claim management, or fraud investigation.
In this article we look at three examples where data can be used by insurers to more effectively identify non-disclosure and other associated risks.
Modified car data
Modified cars may cause concerns from a road safety perspective as certain modifications can make the car more dangerous to drive. Ownership of a modified car may also tell you something about the drivers’ behaviour and the relative risk to their cohorts. A motorist with a car that has several ‘sport’ modifications for faster driving may not be as inclined to adhere to speed limits as the average driver on the road, for example.
According to Money Supermarket, 45 percent of vehicle owners in the UK do not notify their insurer about any modifications present in the vehicle.1
Some insurers try to overcome this risk by asking potential customers to submit photos of their car when applying for insurance. However, this often won’t tell the insurer all modifications that have been made, including whether the engine has been upgraded.
But when it comes to selling the car, they can often change their tune.
There are a number of reasons for listing car modifications online, whether that be to recoup some of the costs incurred from likeminded enthusiasts interested in better performance or to simply communicate that the car is not being sold as standard. Modifications, such as a liquid petroleum gas (LPG) conversion, a faster engine, or changes to the exhaust and suspension, may not appeal to all potential buyers, but insurers should take advantage of external data that can verify their presence.
Verisk Ireland works with partners who acquire vehicle data from numerous sources in the market, including classified car advert web sites. Verisk can provide alerts that the vehicle has been modified to insurers in real time at the point of quote or at the claim stage to ensure the correct information is being used.
Vehicle ownership history patterns
Traditionally, when a customer takes out a new motor insurance policy, insurers tend to just look at the number of owners a vehicle has had or how long the current owner has possessed that vehicle. While there is value in doing these checks, there may be layers of information behind this data that are not immediately obvious.
It is not uncommon to see cars that are only a few years old having multiple owners. However, frequent changes in ownership can indicate some underlying problems with a vehicle that is triggering this activity. For example, a car being bought and resold multiple times in a short timeframe should cause concern among insurers and may indicate some problem with the vehicle that the owner has not mentioned.
Verisk Ireland’s services provide insurers with actionable intelligence based on years of experience in aggregating and analysing vehicle specification, ownership, and usage data. As new data sets become available, we can quickly incorporate them into our solution and provide new insights to motor insurers.
With the ubiquity of smartphones, more insurers are receiving photos from their policyholders following a motor accident to highlight the damage caused or to prove who is at fault. The technology to inspect and analyse images has improved considerably in recent years, but the insurance market has been slow to exploit the huge potential in this space.
Being able to verify information from such imagery at the application or claim stage carries obvious benefits around improving operational efficiency and the customer experience; however, it is not without its own challenges. When customers choose not to disclose information about their vehicles, they may go a step further and misrepresent the state of their vehicle with incorrect or doctored imagery.
Fraudsters may lie about when and where an image of their car was taken. For example, they may use an older image of their car when it was in a better condition or before it had modifications made to the exterior at the application stage. They may also fabricate or exaggerate an accident and then submit photos that show extensive damage to their car.
Thankfully for insurers, any picture taken with a smartphone today is easily extractable and filled with precious metadata which can tell you about the location the photo was taken, the original date of the photo, the last modified date of the photo, and the phone make and model.
As more insurers use customer-submitted photos to assess damage, Verisk’s FraudStar can automatically screen images for digital manipulation and identify information about the photo which may be inconsistent with the accident details.
How Verisk can help you
In an increasingly competitive motor insurance market, being able to validate vehicle information, verify applicant or claimant data, and assess the relative risk quickly and efficiently are all key to success.
Verisk has gathered and aggregated a very broad set of data across the Irish and UK motor markets which can help shorten the customer journey, reduce premium leakage, and identify potential fraud.
Our solutions are cloud-based, providing insurers with a predictive framework to assess risk during the application process with real-time information on the applicant, vehicle usage, and other correlated data sets.
With the amount of external data available today that can help close any gaps around non-disclosure or misrepresentation, more progressive insurers will surely benefit from harnessing these new and evolving assets.
- ‘Compare insurance quotes for modified cars’, Money Supermarket, < https://www.moneysupermarket.com/car-insurance/modified-cars/ >, accessed 30th November, 2020