In this opinion piece, Adam Gooch from Insure Telematics Solutions offers some examples of how the `black box’ is evolving, and proving to be a useful tool in the fight against fraudulent claims.
Car insurance fraud is a consistent, and troubling problem within the industry. The rise of ‘Crash for Cash’ schemes has been making headlines for years, and exaggerated claims have repeatedly led to losses for insurers, which are then inevitably passed on to customers. The prevalence of fraud has meant that not only do customers suffer from higher premiums, but insurers are also less inclined to trust their customers and often
resort to strict criteria such as age or postcode to determine the cost of premiums.
The car insurance industry has avoided embracing the innovations and advances that have slowly taken over our lives. As we switch to unlocking our phones with facial recognition systems, and running our personal lives through the support of digital assistants, it is surprising to note that little of the same progress has been made in the insurance industry – until now.
Rather than simply mistrusting certain “types” of customers, the motor insurance industry has finally embraced the development of technology and developed innovative new ways to fight fraud.
One very big and prominent development in the car insurance world is telematics. The rise of telematics motor insurance is a complete game changer, and the progress we are still making in terms of developing state of the art technology within telematics insurance should not be underestimated.
Simple cases of “Soft fraud”, wherein consumers provide or verify out-dated or incomplete information are now much harder to carry out under a telematics insurance policy. You can’t lie about where you live, because a telematics device will show your car parked in your neighbourhood every night, and more importantly – where you live will become less important as the policy will be decided based on your decision to have your car fitted with a telematics device, and the subsequent data collected about your
driving habits.
Unfortunately, advances in our ability to detect fraud do not always work to prevent consumers from attempting to gain cheaper insurance premiums by omitting information. One recent case for Insure Telematics Solutions saw an insurer save approximately £25,000 on a claim. Following an incident, we received the data from the telematics device and after some analysis found that the driver’s habits were very similar to that of a delivery driver. Most insurers do not cover delivery drivers, so we reported this information back to the insurer, who checked in with the customer to ask
about his occupation and the incident in detail. What they found out was just as we had suspected – the customer in question had indeed been in an accident, but had failed to disclose the fact that he was a takeaway delivery driver!
This case is not unique, and illustrates how telematics, which began as a simple and natural consequence of data collection, has advanced to become a tool for fighting insurance fraud. As a result, in cases such as this one, not only did the insurer save a lot of money, but the people local to the driver weren’t tarnished with the effects of a negative influence on their postcode.
Of course, telematics is not the only way in which motor insurance has begun to incorporate technology in order to fight fraud. The data that we can access is growing indefinitely, and social media has become an integral tool for everyone, businesses and individuals alike.
Technology does not have to be particularly complex in order to have an impact on insurance fraud. It is therefore refreshing to see the motor insurance industry engaging with the incredible and advanced tools we have developed to manage simple cases involving fraud.
Telematics works to develop a relationship between the insurer and the customer, and the customer and their driving. The old relationships between consumer and company have eroded, and the lines have been blurred with the rise of communication platforms such as Twitter. Companies now have a presence and are often required to have a personality. In the telematics world, allowing drivers to access the data we collect on them means that they are less likely to be inclined to commit fraud, and more likely to
engage with their own driving habits in order to become safer and better drivers.
In turn, the claims process has been streamlined. The development of an advanced algorithm with Microsoft Azure, for example, has allowed Insure Telematics Solutions (ITS) to streamline the claims process so that a combination of Machine Learning and AI works to detect whether an incident is true or not, and inform the insurer immediately. Developing the tools to streamline the claims process has allowed us to engage with
insurers and their customers, in order to aid motor insurers in their goals to join the modern, inter-connected age of technology.
Fraud in the motor insurance world is now under threat by the motor insurance industry’s use of existing technology, such as social media and data analytics, and the development of cutting edge predictive modelling and crash algorithms. Telematics, if given the opportunity, could continue to be a phenomenal development against fraud, and a great technological advance as a whole.
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