Most of us are familiar with the famous Fort Knox; a US Army base in the state of Kentucky that holds a large portion of the country’s wealth in gold bullion. In fact, the facility holds three percent of all the gold ever refined throughout human history.
How does this relate to the insurance industry? The current revolution which is sweeping the industry is Big Data, but the challenge facing most companies is that they do not know what to do with all of the data which has been collected. TransUnion has come up with a solution to this problem through the redevelopment of its Insurance Data System (IDS).
Offering a lifeline
Developed in 2001 under the guidance of the South African Insurance Association (SAIA), the IDS is a comprehensive database of the majority of the country’s personal lines claims and policy information gathered from participating members within the short-term industry.
Ian Logan, Senior Director Business Development: Insurance and Partners at TransUnion, points out that the system currently holds between 60% and 65% of the country’s information relating to the short-term industry claims and that TransUnion is aiming to increase this to 90% by June 2015.
The quick buck stops here
One of the major problems in the insurance industry is the level of fraud which is occurring in the motor sector. This is the major contributor to insurers complaining that their motor books are under pressure with little relief in sight.
Ideally, a company would like to stop this. This is hard as there are a number of tactics certain members of the public use to commit fraud. One tactic is to lodge multiple claims with an insurer; the owner of one vehicle registered 25 claims with an insurer over a space of seven years. Another tactic is that a policyholder will jump from one insurer to another insurer in order to claim on his vehicle.
There is also the ongoing battle against cloned vehicles. How bad is the problem? Logan points out that information gathered by the IDS shows that 14 vehicles currently have 255 claims with insurers across the industry.
This is all the information insurers can get off the IDS database once they have handed over their information (datadump) to TransUnion. “Since the IDS has moved over to a new operating platform, the sorting and collection of information has significantly improved. This has allowed TransUnion to focus on data quality and will ensure that insurers can get the best data possible in order to decide whether a claim is valid or fraudulent,” says Logan.
Killing an industry bugbear
The high level of costs has been an issue which is also putting significant pressure on the motor books of insurers. In an ideal world, if costs within the industry can be reduced, benefits can be passed down to policyholders in the form of lower premiums.
The IDS system also offers insurers access to a number of value added solutions. The Claims Enabler function is a process which aims to speed up the claims process and make it more efficient. Quick Quote offers a number of data and credit models to help insurers reduce risk by predicting the loss ratio and potential lapse rate of an applicant.
“ENatis Integration enables insurers to check and verify drivers licences, as well as access to the Auto Information Solutions system to verify the registration status of a vehicle, vehicle valuation, and more. It also contains important information such as how long a person has had a drivers licence for and how many claims he has made with previous insurers. This means that companies can identify high risk individuals and price their risk appropriately,” concludes Logan.
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