It could be suggested that insurers have partially fuelled this approach by aggressively marketing and selling their products on price. The growth in consumer use of mobile technology has meant increased and easy access to comparison sites and online insurance providers, a channel that affords the insurance consumer a sense of anonymity with no requirement to deal with another person. Add to these factors the rise of the ‘Ghost Broker’, or illegal insurance intermediary, who secures lower premiums for both unwitting and complicit insurance consumers, often using online misrepresentation and the combined challenges are very apparent.
The implementation of the Consumer Insurance (Disclosure & Representations) Act in April 2013 has been a shift to insurers undertaking more screening at point of quote and point of sale to reduce the risk of misrepresentation and non-disclosure. The Act removes the duty on consumers to disclose any facts that an insurer would find material and places the onus on the insurer to ask clear and specific questions at policy inception. When screening and considering property insurance risk factors these can range from the property/building risk assessment, the construction and size of the property, value and condition of the property, location and crime statistics, the contents being insured and whether the property is owner occupied, commercial or private residential. And what of the individual policyholder and their propensity for making claims?
What are common fraud/risk typologies used to achieve lower property insurance premiums?
Rental properties insured as owner occupied.
Non-disclosure/misrepresentation of property attributes. 
Non-disclosure/misrepresentation of multiple occupancy at a property.
Misrepresentation of the size or construction of the property and its condition.
Non-disclosure of previous claims history.
The opportunities for misrepresentation are many and whilst insurers are clear that the majority of insurance consumers are genuine, the need to protect their bottom line and their honest policyholders from the financial impact of fraud necessitates a forensic approach to policy applications. Surprisingly, historically there has been less emphasis placed on ‘knowing your customer’ in the insurance sector, compared to the banking sector which has clear compliance requirements. Whilst insurers face consumer demand for a quick sales process, this must be balanced against the need to gather accurate information about a consumer, reduce the prospect of misrepresentation and price the risk accurately and competitively. And this is where screening of the individual, the property and any claims history is key, swiftly drawing on insurer and third party data sources and applying relevant analytics, to ensure an accurate, holistic view of the risk is available.
So what can CRIF do to help? Our services will rapidly:
- Screen the individual and their residency;
- Search for other linked addresses to the individual;
- Review the CUE database to identify any non-disclosure of previous claims;
- Review the property attributes to ensure no misrepresentation;
- Mine data sources to identify intelligence related to property value, size of rooms and number of bathrooms;
- Identify whether the property has a garage;
- Identify if the property has more than one front door as a multiple occupancy indicator;
- Identify if the property is a rental property.
Screening can take place at point of sale, quote or claim with intelligence and visual images available should investigation be necessary. Delivered as a bespoke service, alerts can be tailored and generated based on an insurer client’s attitude to risk.
