A recent report shows that otherwise honest consumers are committing insurance fraud, omitting information from applications in the belief that it is perfectly acceptable and not ‘real’ fraud.
In the survey the dominant view was a lack of trust with insurers and a third of respondents said they knew someone who had committed insurance fraud. Consumers admitted they feel it is okay to exaggerate claims because insurers “try to trick their customers with small print”. Mobile phone upgrade fraud, where the customer says their existing phone is damaged or lost enabling them to upgrade to the new model through insurance, has seen the biggest increase.
The reported cost of insurance fraud in motor insurance alone – from ‘crash for cash’ and whiplash to minor cases of non-disclosure – is nearly £3.6 million a day.
The findings reflect research LexisNexis Risk Solutions carried out in 2015, which found 35% of consumers believe it is acceptable to falsify data in their insurance application or claim – up from 26% the previous year.
Our study analysed UK drivers’ attitudes towards fraud, and it also found that 55% of drivers believe an insurer should still pay out on a claim, even once it has been found to have contained false information.
Worrying statistics such as those revealed in these two studies highlight the increasing importance of verified data in insurance application and claims assessment processes.
Verified data is a vital component in the insurance industry’s ongoing fight against casual motor insurance fraud, as it can help effectively manage risk at the point of underwriting and also help the claims team in identifying fraudulent claims.
In a separate analysis of data from three insurers, we found that 41% of consumers who had a prior claim under-reported those claims when applying for a new policy. Claims costs of these consumers were 56% higher than the average, and 34% higher than consumers with the same actual claims history who had declared information accurately.
New solutions such as pre-filling application forms with verified data can simultaneously improve the customer’s quotation experience and subtly discourage falsification or omission of data. One of the most commonly misrepresented pieces of data in a motor insurance application is the No Claims Discount (NCD), whether deliberately or inadvertently.
The LexisNexis NCD Module is an NCD information database containing approximately 80% of the UK market, on track to be 90% by the end of 2016, and is just one of the ways we are helping insurers tackle application fraud and provide more accurate quotes first time.
Follow the link to the LexisNexis Risk Solutions website to find out more about how we support insurers.