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Billing Scam Case Study

The Problem
Auto policy duration is falling.  In the online market the average duration of a policy is substantially less than six months. This means that customers are abandoning their policies before they expire. Why? Vehicle owners are required by law to insure their vehicles. Some of these owners have concluded that they don’t need to have insurance rather they just need to have the insurance card proof. The result is many customers sign up for a policy, agreeing to pay the premium in a series of installments.  Once they get the card and sometimes once they get preexisting damage fixed, they stop making the payments.

And customers who do this do it over and over again. They get away with it because they modify key details each time they apply for insurance. One time the husband will apply, the next time the wife. One time their home residence will be listed, the next time their oldest child’s address will be used. It is exceedingly difficult for insurance carriers to identify that all of these variations are in fact generated by the same household.

Until a top US insurer implemented our idFusion real time point of sale underwriting fraud prevention platform.
The solution
First they used idFusion to fuse quote, claim and policy data into a highly available real time data repository and then with our idAnalyze query tool, they identified historical sequences of quotes where risky drivers were first included and then subsequently excluded from policies. They calculated this premium “leakage” to be at least several percent of net premiums written.
Armed with this new insight, the carrier implemented VeracityID’s idQuoteMonitor software tool which uses sophisticated entity resolution and graph network technologies to identify sequences of quotes coming from the same household even if the names on the quotes are different. This, when combined with other business rules, gave the carrier a clear, real time picture of which quote requests likely contained hidden drivers.
Then using VeracityID’s highly configurable  intervention communication tool – idResolve, they automatically intervened during the quote process, identifying the missing drivers by name and giving the customer a choice of either adding them to the policy or formally excluding them from coverage.
The Result
The carrier found that using this real time intervention approach resulted in hidden drivers being disclosed or in the customer abandoning the quote. From the carrier’s perspective either of these two results were desirable because they had already determined that elimination of this manipulation would lead to a significant reduction in premium leakage.

The carrier also found that using the idFusion platform and VeracityID’s pre-built rate manipulation solution made the process of scoping, designing and implementing this and other forms of premium leakage prevention much quicker and more successful than had they not had VeracityID tools to leverage their efforts.

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