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TRANSUNION
Quality data can reduce R10 billion fraudulent insurance claims
Insuring the incorrect vehicles resulting in considerable under collection of
premiums
Prince Njaju
editor@itinews.co.za
The heavy burden of insurance fraud in South Africa – currently estimated at costing the industry around
R10billion annually ­ could be reduced significantly if the quality of data improved.
That’s the view of IDS Steering Committee chairman Collin Matthee who said that according to the SAICB,
an estimated 20percent of insurance claims in South Africa were fraudulent.
To complement the fight against crime, the Insurance Data System (IDS) was established by SAIA and its
members in partnership with TransUnion more than a decade ago in an effort to provide for quick and easy
verification of previous claims and policies.
The database of personal lines claims policy and vehicle information currently holds over 9million claims and
6million policies submitted by IDS participants – South Africa’s leading insurance companies and
underwriters.
Participants submit their policy and claims information, which is matched to existing information.
Participants can then make an enquiry to assess the underwriting risk associated with an individual, address
and/or vehicle. Similarly, the system can highlight potentially fraudulent elements when claim enquiries are
submitted.
However, incomplete or inaccurate data submitted by IDS participants is undermining the quality of the
information provided to members.
According to Ian Logan, Senior Director: Insurance & Partners at TransUnion, a recent exercise undertaken
by TransUnion to reconcile IDS data on vehicle claim information with TransUnion Auto Information
Solutions data received directly from vehicle manufacturers, revealed a significant disconnect.
“Of the 90 000 IDS records examined, around 40 percent were not found on the TransUnion Auto database.
This was largely because the information provided by IDS members was incomplete or inaccurate,” Logan
said.
Only 22 percent of the IDS members’ records examined included the vehicles’ VIN and engine numbers.
These identifiers are essential to ensure a vehicle being enquired about is the vehicle it is purported to be;
and, for example, that multiple claims for that vehicle have not been submitted to different insurance
companies for the same event.
“To enable a more complete view of policy and claims data, TransUnion has redeveloped the Insurance Data
System to make it easier for members to submit data to the IDS as well as wider and easier search criteria.
However, IDS participants will also have to drive improvements for data collection, storage and submission
within their own operations,” Matthee said.
According to Logan, common areas where data quality is an issue is at quote stage where inaccurate ID
numbers and names are captured, as well as incorrect vehicle data.
The result often is that insurers are insuring the incorrect vehicles resulting in considerable under collection
of premiums, as well as challenges in the identification of a vehicle if stolen.
“Once the industry is more progressive in managing data quality throughout the customer lifecycle, it will
assist all insurers to not only identify fraudulent activities, but also to differentiate between good
policyholders’ misfortune and high risk policyholders.
“In addition, the recent industry drive towards Treating Customers Fairly (TCF) supports the use of more
data at underwriting to ensure that the correct rates are provided – but this has a heavy dependency of the
quality of data submitted.
“From our industry engagements, those insurers who collate the most accurate data have the lowest claims
ratio’s as they correctly underwrite at inception and have more successful recoveries.”
Having redeveloped the Insurance Data System, TransUnion is embarking on a major drive to ensure
industry wide participation to enable a complete view of all personal lines insurance claims and policies. This
should be complete by the end of 2014.