The Underwriting unit of Verisk Analytics today announced the launch of RISK:check POS (Point of Sale), a new underwriting model for personal lines automobile insurers, which was designed to simultaneously identify applications with a high likelihood of future claims fraud and find rating errors that result in premium leakage.
Fraud is a pressing issue in the industry, Verisk asserted, and while consumers demand more options, including the ability to quote, buy and manage policies directly and via mobile devices, perpetrators of fraud are becoming more sophisticated.
The challenge to control fraud and rating error has never been more complicated, according to Verisk. The National Insurance Crime Bureau (NICB) has estimated 10 percent or more of insurance claims involve fraud. Furthermore, Verisk Underwriting has estimated that due to incorrect addresses, drivers not listed on policies, and other factors, premium leakage can represent 10 percent of unrealized premium.
"Carriers that offer a superior customer experience, control expenses and use technology at the point of sale to manage the small percentage of risks related to fraud and premium errors will enjoy a sustainable competitive advantage in the market,” said Neil Spector, president of Verisk Underwriting.
"The RISK:check POS model was developed through millions of carrier-provided policy and claims records," Spector said. "It has been further vetted and validated with more than 10 million new business policies in dozens of retrospective actuarial studies on behalf of regional and national writers. The model has been demonstrated to improve first year loss ratios between 3 and 6 points."
RISK:check POS can be incorporated into a fully automated underwriting process and is compatible with all personal auto distribution channels, including agency, call center, and Internet.
