As the cost of living bites, tackling insurance quote manipulation is key
By Helen Richardson, senior product manager at LexisNexis Risk Solutions Insurance
83% of adults in the UK reported an increase in their cost of living in March 2022, so it may be little surprise that, 68% plan to reduce their motoring spend this year including shopping around for cheaper car insurance. With research clearly showing that a fifth of motor insurance buyers think it is fine to manipulate quote details to obtain a lower quote on their premium, insurance providers need to raise their game as the potential for application fraud rockets. This isn’t just about protecting the bottom line; it’s protecting customers from the risk of a policy becoming null and void if a deliberate misstatement is identified at claim.
In order to tackle the problem of quote manipulation, we first need to understand exactly what it is. Put simply, quote manipulation happens when an individual changes or omits factual information requested in the online application process, to understand how it impacts the premium quoted. People often do this across several quotes to compare results. But exactly what are the application fields most prone to manipulation and how do insurance providers discover this?
Despite ‘fronting’ being recognised as a crime, and punishable as such with the potential for a criminal record, some insurance applicants are still willing to take the risk of declaring to an insurance company that they are the main driver of a vehicle, when it may actually be their much less experienced offspring or sibling who would be more costly to insure as a main driver. Indeed, at LexisNexis® Risk Solutions, using a database that connects and compares millions of motor insurance quotes from across the market, named driver fraud is recognised as one of the areas of information, along with where the car is parked, no claims discount history and vehicle modifications, that can be most prone to manipulation.
How do we know this though? Insurance professionals have been accessing data from public records and credit-bureau based solutions to help verify information during application and onboarding processes for a while now. This has worked well – to a point. Yet, it has only been more recently, through the sharing of insurance specific data from across the market – policy history, quote history, claims history – that insurance providers can really start to understand the risks and opportunities associated with a new applicant or an existing customer at renewal.
In fact, matching, verifying and validating customer data from across the market is fundamentally the most effective way to price insurance accurately, spot the flags for fraud and deliver a smoother customer journey. Imagine then the potential for a database which uses the power of quote data gathered from across the market to help identify the probability of data being manipulated between quotes over a specific period of time.
The use of real-time quote data using a market-wide quote history database has the power to help identify potentially fraudulent behaviour for improved risk assessment and pricing accuracy at point of quote, and helps in treating customers fairly. This not only supports early fraud detection but can also help consumers and insurers alike from the need to tackle difficult, often lengthy disputes later down the line. By uncovering potential misstatements at point of quote, these insights can help protect consumers from what may seem a small fib that could have dire consequences for a claim outcome. Meanwhile, for the majority of insurance buyers, the customer journey is enhanced through streamlined fraud application checks and an expedited quote process.
As the cost of living crisis continues apace, households will naturally look for ways to cut back. Quote manipulation is not new; even before the current cost of living crisis, our research found that 2 out of 5 motor insurance customers thought it was acceptable to manipulate some of the information they provide when obtaining a quote from a price comparison site. The difference is that today, the vast majority of quotes are done in a faceless environment online and consumer willingness to manipulate quote data has increased. Now is the time for insurance providers to leverage quote intelligence to better price and protect customers through one of the toughest financial periods in the last few decades.