Life insurers focus on better risk segmentation through data, analytics and technology. This new tool will help them predict and manage risk within the underwriting and claims management processes
LexisNexis® Risk Solutions has launched a new data platform, Intelligence Exchange that helps life insurance companies predict, assess and manage risk better within the underwriting and claims management processes. A report by Indiaforensic estimates that fraud alone costs the insurance industry $6.25bn per year or around 9% of premiums. Insurers are often challenged with High Underwriting Expenses; Lost Premium Opportunities; Adverse Risk Selection; Not Knowing Sellers
Intelligence Exchange will allow insurers to better mitigate risk by checking an insurance proposal against records in the database to confirm underwriting facts and check for misrepresentations, non-disclosures, policy stacking, declinations, surrenders, lapses and claims histories. Insurers can also review an incoming claim against claims made with other insurers for inconsistencies to ensure faster settlement of genuine claims and coordinated investigations of suspicious claims. The cost for insurers will be around 0.5% of the insurance premium. It would also look at lapse of data and analyse the reasons that, often, involve an insurance fraud:
Misrepresentation and non-disclosure of relevant facts in the application
Collusion between agents / diagnostic centres / investigators and the applicant and/or beneficiaries
Stacking of policies by insured or the beneficiaries
Lapsing of a policy in 2nd / 3rd year either due to mis-selling or deliberate churning by an agent
Time will tell if the new tool helps insurers tide the challenges it is facing with amendment to the Section 45 of the new insurance Bill, which states that a policy cannot be called in question after three years of it being issued. Insurers will find it almost impossible to repudiate claims after three policy years due to the amendment. It puts the onus on the insurer to do proper checks at the time of underwriting. There will be need for robust underwriting process so that all issues are flagged before the policy inception. Read - http://www.moneylife.in/article/will-life-insurers-now-bleed-with-fraudulent-claims/42596.html
Will a US-based leading provider of data, analytics and technology for insurers be successful in being a step ahead of Indian fraudsters who are out there to hoodwink life insurers? According to a senior insurance official, there are specific locations in India where insurance fraud is prevalent. “We are wary about underwriting policies from these locations. They work in an organised way with full set of forged documents to cover up the fraud. There can be cases of insurance taken in name of dead person with death certificate forged to put a future date after fraudulently buying the policy,” he said.
Intelligence Exchange will also help insurers assess seller performance, patterns of mis-selling, and churning, and identify fraudulent linkages between various stakeholders. The platform will also be a gateway to other data sources that help with KYC/ AML verification, and credit history verification as such data sources become available from LexisNexis.
It leverages high-performance computing cluster technology called HPCC Systems®, which is one of the most advanced big data processing technologies available, using proprietary linking algorithms to improve match rates, with a long and successful track record of use in high volume and high response production environments.