In a ground-breaking initiative which is set to provide the template for insurers serving the intermediary sector, Groupama Insurances in the UK has significantly reduced the risk of fraud in its private motor account by implementing a powerful combination of data screening tools post the premium quotation.
This pioneering development has not only enabled Groupama to decline more than £2m worth of premium where the risk of prior claims misrepresentation was calculated to be unacceptable but has also enabled the insurer to underwrite risks more accurately, helping to ensure honest policyholders pay a fair price for their motor policy.
Since January 2012, Groupama has screened approximately 25,000 quotations per day using a combination of claims information and basic credit information:
-Motor CUE via Informed Portfolio (IIL) to check previous claims matches the history declared by the prospective policyholder
-Public credit information to enrich the data and allow more accurate risk-based pricing. This utilises various validation factors including date of birth, the address at which the vehicle is kept and, electoral roll confirmation.
Any mismatches are then referred back to the broker/customer post sale to check the information and ensure it is correct.
The next stage of development will see a screening process rolled out across most major software houses.
Kevin Kiernan, Personal Lines director at Groupama Insurances said “We believe we are the first insurer targeting the broker market to combine previous claims history with public credit data to improve our pricing and validate our quotations post sale. The results have far exceeded our initial expectations. Now, as a matter of course, we ensure all risks go through a series of data screenings to help identify those who are intentionally misrepresenting themselves by failing to disclose all material facts.”
Groupama sees a discrepancy in around 8% of cases, between declared claims and those highlighted by CUE during the post-sale screening process. Following referral back to the customer for clarification, ‘mismatched’ policies are categorised into potential declines, no further action required and those that are acceptable with an additional premium.
Kiernan continues “It is very gratifying to know that this technique has also helped the police identify a number of fraud rings. We have cancelled/voided over 5500 policies where information needed to provide an accurate quotation has been misrepresented. We are now looking to roll the process out to household, motor trade road risks, courier, taxi and fleet.
As an industry we have until recently neglected the front-end information capture process in an effort to build scale. However, the UK private car insurance market has not recorded an underwriting profit since 1994. While it is hard to quantify how much can be attributed to fraud, we know it is very significant. Clearly something needed to be done. The findings of the first year of this project couldn’t be more timely as the Government announces its crackdown on whiplash claims and fraudulent personal injury claims,”
John Hooper, executive chairman of IIL adds “It has become abundantly clear that there is a real issue with private motor fraud in the UK and the insurance industry has a responsibility to do everything in its power to tackle the problem. We have been delighted with the feedback we have had from Groupama. This has really set a benchmark for the rest of the industry to follow. “
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