Auto Insurers Have New Tool to Validate Rate Info

Auto insurers focused on eliminating rating errors introduced during the sales process now have a new weapon to identify inaccurate or fraudulent information. In a move that places advanced data analytics techniques on the front line of auto insurance sales, Quality Planning Corporation (QPC) is introducing QPConfirm®.

QPConfirm works in conjunction with an insurer's existing sales process and systems to flag questionable policyholder information when it is first provided. During the new business application process, QPConfirm reviews select rating elements, such as annual mileage, commute distance, and business use for accuracy, currency, and legitimacy. Within seconds, the new-account representative (or, in some instances, the underwriter) receives an analysis of the reviewed data that highlights potentially flawed, false, or incorrect policyholder information.

QPConfirm works in real time, uncovering costly insurance premium rating anomalies by comparing rating information provided at the point of sale with QPC's proprietary analytics and databases, and other independent data sources.

A recent study (1) conducted by QPC revealed that a substantial number of rating errors are introduced during the sales process. QPC's research revealed that underwriting new customers without conducting thorough audits is risky - and potentially costly. Quite often, the initial rating information is suspect and will result in an underpriced policy at best, and quite likely in losses that eliminate any possibility of first-year profitability. QPC's audits have shown that new business booked at inadequate rates costs auto insurers hundreds of millions of dollars each year. The primary cause of the inadequacy is non-verified information that is false, dated, or incomplete.

Until now, those errors were hard to detect and remained invisible until a rigorous check of policy information was conducted 6 to 12 months later. By placing sophisticated rating integrity technology at the front end of the customer life cycle, insurers can realize the following benefits:

* accurate initial pricing; * early identification of true risk; * improved rating integrity; * significant premium uplift; * lower loss and combined ratios.

(1) Getting Off to a Clean Start: Why Point-of-Sale Verification Improves Pricing Accuracy. Quality Planning Corporation, April 2008. (This white paper is available at www.qualityplanning.com).