Insurance
The negative impact on loss ratios from the rise in fraudulent insurance claims is well documented. The effects are being felt throughout the sector, by underwriters, by brokers and by claims handlers. The number and frequency of fraudulent insurance claims have almost doubled over the last five years, with 2,500 new cases worth £18 million being uncovered every week. First party fraud (opportunistic fraud committed by the insurance policy holder and a third party) contributes significantly to these figures. It can be manifested in the following ways:
- Exaggerating or inflating claims for damage to cars or property, lost valuables or luggage.
- Staging events, such as motor or home accidents.
- Deliberate non-payment of premium instalments, after receipt of the insurance certificate.
Research by the Association of British Insurers in 2009 provides a fascinating insight to the attitudes of consumers to making claims. Of those surveyed, 16% wouldn’t rule out making an exaggerated claim and 44% regarded it acceptable behaviour to increase the value of a claim. Conventional fraud techniques, that prove identity, can’t predict these behaviours or attitudes. Not when they come from legitimate customers. cipher:risk from Fraudscreen can, and it does so at either individual or geographic levels.
In practice, cipher:risk is proven to deliver the following insights and benefits:
- Predict claims frequency and claims severity.
- Predict those customers who are more likely to renew their policy.
- Predict those customers who are more likely to cancel their policy within the first 3 months.
- Be easily incorporated into risk/pricing models at postcode or postal sector levels.
- Deliver automated risk assessment decisions in real-time.
- Improve loss ratios by reducing the cost of claims and increasing the net revenue per new customer.
For insurance underwriters
cipher:risk can be easily integrated as an enhancement to existing pricing models. The approach takes advantage of your existing processes and requires no IT infrastructure changes. The resulting insight and segmentation provides a better risk assessment from which appropriate premiums can be set to cover potential losses. By identifying which customers offer the greatest potential value (fewer claims, propensity to renew), tailored communications and propositions can achieve greater financial returns.
For insurance brokers
Use cipher:risk as part of real-time pricing modules to load or discount premiums quoted, including deposit and instalment values to negate losses from non-payment and cancelled policies.
For claims handlers
Meet deadlines set by the Ministry of Justice for liability decisions and satisfy requirements to treat customers fairly, through improved customer insight in support of claims investigations.
For lead generators/aggregators
By integrating Fraudscreen’s real-time solution into your lead management platforms, websites or call centres, up to 200 leads per second can be coded against cipher:risk. By adding this extra level of qualification and risk assessment to the data you provide, prices can be set according to the potential value the lead will generate for your clients beyond conversion.
