Risk, Claims & Anti-Fraud: Richer Data Improves Every Process

In this latest column, Robert Harris, Global Product Manager for Insurance Fraud, BAE Systems Applied Intelligence, takes a look at the true value of data to insurers.

There is a lot of well-meaning advice about how insurers can use data more effectively to generate business and provide better customer service, and that has only intensified with the rapid rise of digitalisation and new data-gathering technologies. New approaches mooted include more personalisation, pre-populating forms, self-service client portals, and streamlining the claims process – but are these just tinkering at the edges? What would insurers need to do to really change the game and make a demonstrable positive impact on a customer’s life?

They have a great opportunity here to become trusted guardians of customer data, while at the same time giving people valuable services, rather than simply attracting short-term business by being the cheapest. The challenge lies in having the right data at the right time for the right customer.

Organisations like banks and supermarkets have an ongoing and in-depth view of their customers’ data, providing deep insight into their behaviour – what appeals to them, what they’re looking for, and what their risk profile looks like. By contrast, an insurer will get snapshot information at underwriting, but after that there’s little or no contact with a customer unless of course they make a claim, – the point at which insurers find out most about their customers, good and bad.


Imagine insurers had the ability to track many of the things that they take a gamble on today. Like it or not, phones are now being used to track people, and the Internet of Things is able to track objects like fridges and washing machines to detect problems that could cause insurance risk, which may otherwise go unnoticed.

There are two key barriers keeping this information out of an insurer’s reach – people’s natural suspicion about how their personal data is being used and concern about its security, and the sector’s current inability to incentivise customers sufficiently to take it on.

Why should people let an insurer track their day to day activities if all they get in return is a small reduction in their premium? What’s far more likely to convince them is being offered something that significantly helps improve their life, keep them safe from harm or loss, or even save them money. So what might that look like?

Imagine you’re going into the city one night for a meal, looking for somewhere to park and go for a meal. An insurer with telematics installed could warn you that there have been a high number of car thefts on the street you’re in, and send you directions to the nearest secure car park.

Or what if your fridge has had a manufacturer recall notice for causing fires and your insurer can let you know immediately, cutting the risk to your home and property?

This kind of protection against loss of possessions, and the resulting stress and inconvenience, is surely a genuine win-win scenario.

Of course the rapid growth in this kind of collection and exploitation of customer data brings a threat from fraudsters seeking to hijack information and use it for criminal purposes, so it’s crucial for insurers to protect their customers against this too. Huge strides have been made in the fight to stay one step ahead of the criminals, and data sharing and analysis has a big part to play.


In the past, claims systems have only passed the minimum data to fraud teams, focusing on required data for a single specific purpose. The technical challenges of cleansing and preparing data more broadly often outweighed the benefits of sharing it.

Today those barriers have reduced significantly, opening up data-sharing opportunities across teams and enabling more accurate identification of fraudsters, especially when combined with third party and industry data and connected through advanced entity networks and link analysis.

This also makes it easier to identify and understand good customers. For example, insurers can delineate the risk profiles of an applicant who shares an address with another customer. Although the two may have the same address and possibly surname, their risk profiles could be wildly different.

If one has never made a claim, insurers will want to factor that into competitive rates; if the other is behind on renewals and applies for a second policy, insurers will want to ensure that’s flagged.

Insurers will no longer miss an opportunity with good customers because underwriting has not made the connection that a good fraud detection system does automatically.

At the end of the day, insurers are looking to protect their customers whether it’s preventing car theft or foiling fraudsters; and the trick to doing both lies in the data.


About alastair walker 12099 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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