Case Study | Reducing motor loss ratios

Sector Motor Insurance
Products  cipher:risk
Application Risk / Pricing

Official estimates put the annual cost of insurance fraud at £1.6bn, with opportunistic frauds such as bogus whiplash and inflated claims growing at an alarming pace; CIFAS reported a 54% increase in insurance fraud between 2008 and 2009. Like many insurance underwriters, our client was suffering increased loss ratios as a direct consequence of more frequent and higher value claims.

Motor Insurance Loss Ratio %This was costing the business 93% of revenues earned. Fraudscreen was asked to help reduce loss ratios by identifying which new customers represented the greatest risk in terms of claims frequency and value. The resulting segmentation showed a 121% variation in % loss ratio between the best (top green) and worst (deep red) groups.

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