Product Screens New Car Policies for Likelihood of Fraud

A recently released product from Verisk Analytics puts an eye on fraud earlier in the process that consumers use to buy an auto insurance policy, automatically screening new policies for the potential for “fraud and premium leakage.”

The company said that the product is a major shift from current screening practices in the industry that “typically focuses on catching fraud at the time of a claim.”

Verisk: Product Addresses Need to Spot Fraud ‘Earlier in Policy Life Cycle’

According to Verisk, insurers that submit new policy data to the company’s Coverage Verifier technology can now use RISK:check Point of Sale so that those insurers are “better able to identify fraud and rate evasion while they still have the opportunity to take action.”

But “big data” analysis allows Risk:check Point of Sale to pin down “patterns of behavior” in new policies that are likely markers of fraud, John Cantwell, the company’s vice president of auto product management, said in a statement.

Screening takes place at “point of sale,” allowing insurers to identify the likelihood of fraudulent policies, according to Verisk. The company said that insurers often face difficulties in confronting such problems “earlier in the policy life cycle” because it was hard to implement fraud-fighting technologies within underwriting models that are in constantly in flux.

“The beauty of our solution is that there is virtually zero implementation effort and insurers can immediately take advantage of a cutting-edge point-of-sale fraud tool,” he said. [The] speed to market for insurers can be very rapid.“

RISK:check Point of Sale debuted in December 2012, while the availability of the technology through Coverage Verifier was announced last week by a Verisk unit that focuses on underwriting- and risk-related information for the property/casualty industry.

Fraud’s Billion-Dollar Costs Borne by Insurers, Drivers

Auto insurance fraud hits car insurers with crime-related costs but also weigh on consumers’ wallets with inflated premiums.

Verisk said that the insurance industry estimates total losses to be between $12 billion and $24 billion a year.

Such crimes have spawned investigative units at major car insurers across the U.S. like Esurance’s Special Investigations Unit (SIU).

“Detecting fraud and avoiding fraudulent payouts isn’t just good for insurance companies,” according to a company statement about the SIU. “It’s also good for you, the customer, because you won’t have to help shoulder the burden of higher claims payouts.”

Allstate outlines a number of auto-related scams that criminals perpetrate on drivers, including:

  • The swoop-and-squat
  • The drive-down
  • The start-and-stop
  • The two-lane turn sideswipe

Nationwide offers consumers a to-do list that can protect motorists involved in a crash:

  • Call the police to report any accident
  • Document any accident damage and number of passengers in the other vehicle
  • Record all details like names, addresses, driving information and witnesses
  • Don’t tailgate
  • Avoid people “who suddenly appear” and mention specific doctors and attorneys
  • Avoid physicians who push filing of personal injury claims
  • Report the crash to your insurer

Nationwide said it is a “charter member” of the Coalition Against Insurance Fraud, which offers its own guidebook to auto-related scams and swindles and estimates that 1 out of every 3 individuals hurt in auto crashes “exaggerate their injuries.”

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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