INFORMATION EXCHANGE
CONFRONTING HOME INSURANCE FRAUD THROUGH CLAIMS DATA
The temptation and opportunity for consumers to commit application and claims fraud in the residential property insurance market continues to be front of mind for insurance providers. The COVID-19 lockdowns have resulted in significant reductions in some forms of crime, including burglary – in fact, ABI data suggests home insurance claims for theft fell 44% in 2020 compared to 2019, and the value of burglary claims reduced by 30%.
what exactly the claim was for, the circumstances that gave rise to that claim and how it was settled. While insurance providers will hold this level of data for their own customers, when it comes to new risks, they are missing information, which creates gaps in their understanding of the market’s claims experience with that individual. Fundamentally, they have no way of putting a new claim in context with what may have happened in the past.
However, during periods of economic hardship individuals under financial stress may be tempted to exploit opportunities to commit fraud – whether that’s not declaring a past claim in order to secure a cheaper quote or exaggerating an accidental damage or weather-related claim. With claims losses related to climate change a key concern for the market, it is vital insurance providers know as far as possible, the risks they are taking on.
Access to claims data at a highly granular level from across the market could give them this context – showing a new claim as a ‘one-off’ or the latest in a series, as well as providing valuable insight for pricing.
To better understand fraud risk, at quote and claim, home insurance providers need to understand more about prior claims made by the individual before incepting a policy or paying out a claim. They need to understand when a past claim or claims occurred,
The threat this current lack of full market coverage claims insight poses is evident in our consumer research . We found that home insurance providers have a good record of retaining customers who have previously filed claims, with about seven out of ten choosing to renew with their provider following a claim. This is despite the fact that a majority of customers see their premiums increase after a claim based on our study .
