BOCA RATON--The LexisNexis RiskWise Rate Evasion Evaluation service helps insurance providers prevent application and premium fraud using sophisticated models powered by public records data.
Industry studies have shown that the estimated annual cost of insurance fraud is between $85 billion and $120 billion. In 2002, industry studies have shown that nearly $14 billion was lost to auto insurers through rate evasion. This number has been compared to equaling approximately 10% of personal auto insurance premium revenues industry-wide.
Many insurance companies have formal anti-fraud programs, but application and premium fraud (or "rate evasion") has proven difficult to stop or even identify. Rate evasion typically occurs when a potential customer or agent falsifies application information to obtain a lower premium. For example, to avoid paying higher insurance rates, an individual applying for car insurance may misrepresent garaging location, ownership or identity.
Existing solutions for preventing rate evasion have fallen short, according to Seth Perlmutter, Vice President of Insurance Services at LexisNexis: "Current processes are manual, inconsistent, subjective, time consuming, and are not usually effective at identifying applications with high risk of fraud or misrepresentation."
"As part of the new suite of Fraud Triage applications from LexisNexis, the Rate Evasion Evaluation solution allows providers to quickly and cost-effectively improve loss ratios through accurate application and policy assessment," said Perlmutter.
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