How fraud is impacting our industry

April 10, 2015 SSP Limited

Our world now Previously buying insurance was a more traditional affair. The idea that a customer might arrive at a broker’s office and ask them to provide a series of quotes based on 75 different variations of their information would have been unheard of.

Nowadays however, the buying routes that are available to consumers means that they are provided with a certain level of insulation from judgement. Anyone can embellish and amend their data to their heart’s content, from the comfort of their own home, through a series of different devices.

Over time the topic of insurance, and in particular its purchase, has suffered from a certain level of over simplification due to the perceived commoditised nature of the product, with too much emphasis being placed on price. Consumers seem to spend more time these days choosing their new TV than they do considering their car insurance product. This is a symptom of consumers being conditioned on price and not on the coverage this valuable protection product provides. This has resulted in consumers assuming a position of armchair expert around insurance due to the price focus rather than speaking with a specialist to get advice on their purchase of what is, most importantly, a legal requirement.

Why do consumers misrepresent their data?

Only 15% of the data an individual has to declare during their application for motor insurance can be validated. This verifiable data includes:

• Their address

• Vehicle registration


The remaining 85% of data, including vehicle value, where the vehicle is kept, the number of miles driven per year, driver’s occupation and who the main driver will be, cannot be verified. Tying this statistic together with the prevalence of aggregator sites, and their dominance in the market for over 10 years now, is it any wonder that many people are ‘tweaking the truth’ to see what results it has, essentially reverse engineering the pricing methodology that insurers build their models on.

However, due to the over simplification previously mentioned, there is a lack of understanding in the market of the impact that misdeclaration has on a customer’s insurance. It is illegal and there can be real criminal implications as well as leaving the customer completely unprotected in the event of a claim.

What impact is this having on you?

Through our unique lens of distribution we can see that 35% of applicants misrepresent an element of their data and 10% are fundamentally misrepresenting their data this includes changing information such as occupation, vehicle use and NCD information.

This misrepresentation of consumers’ data is having an impact on everyone that purchases insurance as we are all subsidising this fraudulent behaviour to the tune of £50 per person – imagine what you could do with an extra £50 in your pocket.

Working together as an industry to reduce the issue

SSP have developed the first behavioural analytical solution in the intermediated market that uses global unique ID principle and single customer view methodology. Our solution provides the capability to identify a consumer across multiple channels even with amendments to their data to pin point that they are the same person. This means a potential customer can visit a broker’s office, phone in and request a quote or visit an aggregator website and we can track them across this entire journey and highlight any changes in data that could be of concern.

We can give both insurers and brokers, across the UK and internationally, the ability to track consumers buying behaviour and application fraud at pre inception stage to stop these individuals purchasing a policy on an inferior price to the cost they should be paying.

This is another example of how SSP are tackling and addressing real market issues that affect the entire industry from the carrier to the consumer.

For more information on how you can reduce fraud in your business please contact us:

About the Author

SSP Limited

As the leading global supplier of technology systems and software for the insurance industry, our role is to help insurers and brokers operate more efficient businesses. So whether you’re a global insurer or an MGA, a high street broker or a start-up with a smart new idea, we can be trusted to support you on your journey, whatever the destination.

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