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.
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.
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.