The value of shared information

Whenever you apply for credit you set off a chain reaction of queries and responses that travel at breakneck speed across South Africa’s information superhighway. And within seconds the credit provider sitting across from you can give you the ‘thumbs up’ or ‘declined’ on the particular product you’ve applied for. There’s no more waiting for seven days while paperwork gets shuffled from pillar to post… Gratification is almost instantaneous. Personal information is an asset to a business these days. The more you know about your customer or potential customer the easier it is to make business decisions and manage risk. That’s why insurance companies in particular rely heavily on data when issuing new policies and assessing claims.

At a recent Insurance Fraud Seminar hosted by the Association of Certified Fraud Examiners and sponsored by TransUnion, data sharing was high on the agenda. FAnews Online did not attend the event; but enjoyed reading some of the findings shared in the May SAIA Bulletin. TransUnion chief executive, Chris van Rensburg and group forensics manager, Udeen Singh presented on the value of sharing information.

TransUnion’s simple case study

How much can you find out using the building block of South African identify verification – the ID number? TransUnion is the perfect company to answer this question. They manage databases for clients across a number of business sectors, including cellular, insurance medical and retail. But they were quick to point out that these databases are ‘closed’ and cannot be used in data searches and comparisons.

So they set about completing a case study using 1 000 ID numbers which they ‘plugged’ into the Insurance Data System (IDS) and the Credit Bureau Consumer Database (CDCB). And this is what they found:

· 187 of these identity numbers were matched to claims on the Insurance Data System valued at R1 500 000

· 3 identity numbers were verified as deceased by Home Affairs, with 21 of these not matched to TransUnion’s consumer database

· 70 judgments and/or defaults were linked to these identity numbers, totalling R550 000

· 1 008 trading accounts, 142 micro loans and 21 trace alerts were linked to these identity numbers

· 1 870 enquiries had been done on these identity numbers over a three year period, with 37 enquiries and 197 micro loans enquiries on one identity number

· One identity number had 16 other consumers linked to the same address

At the push of a button

What this study demonstrates is just how much information is available at the push of a button. As time passes these records become more and more accurate, with each successive client contact resulting in information being updated and superseded. Insurers aren’t the only people who rely on accurate data. With today’s tougher legislative environment big players in the credit industry have to take proper care before issuing new loans – and complete data goes a long way in making their tasks easier too.

We believe that shared information will also facilitate recoveries and debt collection going forward. Recent newspaper stories covering house repossessions and subsequent auctions indicate that banks can ‘take back’ and sell a house without the homeowner personally receiving written notification of the pending action. We expect the courts will put a stop to this soon – and that means those active in the repossession game will need complete information to track down the defaulting homeowners before the process can continue.

Editor’s thoughts:
If ‘perfect’ information could be shared among all players in the short-term insurance industry it is likely certain categories of fraud would be entirely wiped out. Have you had any experiences where information from a database has prevented you from making a costly business mistake? We would love to hear from you. Add your comment below, or send it to gareth@fanews.co.za