Responsible underwriting

Intermediaries with a long-term interest in the sustainability of their business will understand that it is not just quantity that counts - the quality of the business you write is even more important.

While all brokers need to contain the cost of obtaining a new client, it is even more vital that the broker does a thorough risk assessment to contain or avoid the long-term costs of a high-risk client and fraudulent claims.

Doing this on your own could be a prohibitively expensive exercise, but fortunately the technology harnessed by TransUnion has created an industry wide information sharing platform as a solution.

The Insurance Data System (IDS) is a centralised database created for the short-term insurance industry through which intermediaries and insurers can share policy and claims information, and can access details regarding drivers' licenses, vehicle registration and ownership details and original vehicle manufacturing details.

Access to this industry-wide information provides brokers with a 360 degree view of the risk being underwritten and enables brokers to increase profitability through improved risk assessment and the ability to identify potentially fraudulent claims.

How does it work?

By sharing claims and policy information on a centralised database, brokers have access to the information shared by all the other participants, as well as other value-add information such as driver's license and vehicle registration information.After becoming a member, the broker can access the risk, underwriting and claims information on the system. The broker pays a minimal amount for each "transaction" since the real time Internet based system significantly reduces costs.

Well-known administration systems are able to exchange data with IDS, however, other systems can be interfaced at a cost for encoding the data.

Wealth of information

A 36 month claim and 24 month policy history is available to assess the risk associated with the policy being underwritten. Having this information up front allows brokers to set insurance premiums that suit the risk profile of the client. Access to previous potential fraudulent or suspicious activity also ensures less opportunity for syndication and opportunistic fraud.

The claims enquiry allows underwriters to view a three year history on the claims linked to an individual, vehicle or risk address. Investigation teams can also integrate the pro-active claims alerts into their investigation process.

Fraud prevention

The Claims Fraud Prevention Model is a rules-based model based on IDS Claims information supplied by the participants, which attaches weights to each claims data element. The rules and data elements were determined by the insurance industry during the development. This allows claims departments to prioritise their investigations more effectively.

Vehicle Ownership

Details regarding licensed vehicles, vehicle ownership, titleholder and driver's license information can be accessed. This valuable information is used in claims enquiries, underwriting enquiries, third party recoveries or investigations.

Also available is vehicle birth certificate information from TransUnion Auto Information Solutions, allowing verification of vehicle information for the management of claims fraud.

Reciprocal solution

The success of the system is based on the fact that brokers can only become members if they exchange their data with the system. The bottom line is that this system will not only help brokers manage their portfolios better, but also creates an industry-wide platform for the application of responsible underwriting, with obvious benefits to all the stakeholders involved.