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Auto Insurance Preexisting Damage Claims Case Example

The Problem
Preexisting damage fraud – where new auto policy holders submit claims for damage incurred before the policy effective date – has long been one of the largest fraud problems in auto. But lacking cost effective tools, carriers typically treat the losses from fraudulent early claims as a fixed “cost of doing business”. Until VeracityID teamed up with a top US insurer  to attack the problem.
The solution
Using idFusion – our highly available real time fusion of a carrier’s quote, policy, billing, claims and third party data – and idAnalyze – our query tool, the carrier was able to identify and estimate the loss impact of preexisting damage claims. The numbers shocked them. 
Armed with this new insight, they implemented a new business rule requiring all new customer applications capture vehicle images using VeracityID’s highly automated image capture tool – idMobile. idMobile manages  workflow, image relevance (is it the vehicle?) and image quality (can we clearly see the vehicle?) automatically, making it a cost effective solution to fight preexisting damage claims.
The Result
When implemented, the carrier immediately experienced an almost 90% reduction in preexisting damage claims with dollar savings in the online direct channel in excess of 30 points of loss ratio. And while there was a modest reduction in new policy yields, the bottom line benefits were over ten times larger than any lost margin.
What’s more we found that  a motivated carrier could complete the entire implementation process from configuration to piloting and roll-out in as little as 3 months with only limited carrier integration required. 
And given the size of the opportunity, it won’t be hard to find the motivation.
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