How Insurers can Leverage Photo-based Solutions to Combat Auto Insurance Fraud?

By Alex Meisner, Director of Innovation, Snapsheet

Alex Meisner, Director of Innovation, Snapsheet

Stretching the truth is common, especially in auto insurance. When drivers get into a car crash, insureds can easily include Unrelated Prior Damage, e.g., a cracked head lamp or a dented fenderfrom not being careful in a parking garage.

Today, insurers have to take an insured's word at face value. Soft fraud, such as accidentally backing up into your mailbox and calling it a hit-and-run, is not uncommon in auto insurance claims. In fact, almost 20 percent of all policy holders admit to stretching the truth to obtain a larger settlement, and 42 percent of individuals blame high premium costs as the reason for overstating the truth.

Relying on the honor system won’t help insurers reduce costs associated with fraud, and it certainly won’t help carriers catch fraudsters in the act. With soft fraud costing insurers almost $16 billion a year, carriers are turning to a device almost all drivers have with them during an accident—their smartphone.

Insurance on the Go: Why Carriers are Turning to Mobile Claims Processing Platforms

Deceptively simple yet highly effective, digital photos are a powerful resource for carriers to leverage in the fight against fraud. Pre-policy photos combined with virtual claims processing technology makes it possible for carriers to easily and effectively track damage to a vehicle.

Digitizing the claims workflow in this way does more than meet the needs of customers in today’s service-centric economy. In transitioning to a mobile self-service platform, insurance carriers are better able to:

1. Prevent Adverse Selection and Soft Fraud during the Claims Process: Instead of waiting for a claim to obtain photos, some carriers are collecting photos at the onset or during the renewal period of a policy. Collecting photos at the inception and/or renewal of the policy helps carriers protect themselves against adverse selection and can help prevent paying for unrelated or prior damage when that first claim comes in. A few photos can help carriers identify whether a vehicle on a personal policy is being used for commercial purposes (is there a rideshare sticker on the windshield or a ladder rack on the back of a pickup?), as well as validate the garaging location of the vehicle by leveraging the location data that exists within the metadata of the photo.

"With soft fraud costing insurers almost $16 billion a year, carriers are turning to a device almost all drivers have with them during an accident—their smartphone"

This approach enables carriers to write more accurate policies as well reduce fraudulent claims. After all, a picture is worth a thousand words; not only can carriers benefit at the onset of a policy, photos collected at the onset of a claim are just as powerful. Taking the show and tell FNOL submission instead of just the customer’s word will help mitigate the potential of soft fraud, as well as streamline the handling of the claim by visually triaging the extent of the damages and sending the claim down the right path the first time. The visual evidence can be used to confirm the extent of the damage written in claims and dispute exaggerated reports when necessary. Modern technology makes it easy to deploy photo capture tools that ensure the validity as well as location of the photograph.

2. Encourage Regular Customer Interaction on Mobile Platforms: When customer experience is poor, drivers are more likely to feel like they can get away with soft fraud. One way insurers can cultivate a positive experience is by engaging with their customers at frequent intervals through quarterly check-ins. Heavy mobile users are also more likely to display loyalty towards technologically progressive carriers, as digital natives expect timely responses from carriers and claims to be handled quickly.

3. Build an Accessible Database Documenting Customer Vehicles: Photographs can help carriers build out an internal catalog of their policyholders’ assets over time, and by indexing the photos with the claims and underwriting data, carriers can amass a powerful database that will better serve themselves and their customers. Then, when drivers file a claim, carriers can query the vehicle identification number (VIN) or policy number in their database to retrieve this visual and data rich catalog and review previous claims data and photos. Unfortunately, today, the tools most carriers use to access prior claims data often lack such detailed information surrounding the loss, because they lack a robust history of photos and other associated data.

Technological Innovations will Back up Photo Evidence to Combat Fraud

It’s difficult to dispute evidence when it’s captured in a photograph. And the introduction of machine learning and AI will only make it more difficult for claimants to exaggerate the truth with doctored images.

Machine learning (ML), for example, can instantly analyze data from sources including claims systems, weather channels, social media, and traffic patterns. By integrating ML into a virtual claims processor, carriers are better able to verify the information supplied by insureds.

Another technology solution carriers can incorporate in their workflows in order to fight fraud is telematics. Installed in a driver’s car to monitor their driving habits, telematics-based solutions can collect information such as the number of miles driven or how fast someone brakes. These additional data points are then sent to insurers to inform a customer’s premium, and provide greater context to photos submitted by claimants. Telematics can, for example, help carriers reconstruct crashes with forensic-level detail, revealing data such as the speed of vehicles prior to an accident and the angle of impact.

While insurers are unlikely to eliminate insurance fraud completely, they can implement new technologies such as photo-based solutions to reduce the number of false claims they see each year. By embracing technology and engaging with customers, insurance providers can streamline the claims process and prevent illegal activity that negatively impacts everyone involved.

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