A Great Business Case for Better Analytics if There Ever Was One
Insurance Experts' Forum, July 13, 2011
Sometimes, fraud detection in insurance requires analytics applied with complex algorithms to pick up suspicious patterns, such as a cluster of repair shops in a certain region billing for the same kinds of parts. Or, it might require gumshoe detective work to catch that workers' comp claimant at his favorite surfing spot.
Other times, it just reaches out and slaps you right in the face.
Such as the recent revealed case of Porsche owners classifying their cars as “farm vehicles” to lower their premiums, since farm vehicles only get driven on rural properties. Such as those recently exposed by the LA Times.
How do carriers miss the misclassification of luxury sports cars as “farm vehicles”? According to the article, there's a reliance on agents to make the proper call, or sometimes, underwriters will use Google Maps to determine whether a car is based at a rural address.
Surprisingly, there doesn't appear to be anything in the algorithms that raise red flags for luxury sports farms vehicles. Surely, there must be an app for that.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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