Using data-driven quote manipulation detection to transform pricing

“ The insurance industry is intrinsically focused on measuring risk. It is important for insurers to have good customer conversion rates with overall profitability, so it is important for insurance companies to detect potential risk while keeping pricing fair. Decreasing the impact of quote manipulation on pricing enables insurers to achieve this goal. ”

Kshitij Jain Senior Vice President, Analytics

Quote manipulation is an indicator of higher claims risk. Knowing when the information provided for a quote has been changed, and to what degree, enables insurers to make more informed decisions about the proposed risk and better price premiums. Tackling quote manipulation problem will lead to increase in revenue as manipulators can be quoted differently. Overall, this will help reduce exposure to fraud and enable insurers to model pricing based on a more holistic view of risk.

Based on EXL’s research into quote manipulation, customers who manipulate motor insurance policy quotes to reduce premiums more than 30% have a 5-10% higher loss ratio than customer who manipulate quote to reduce premiums less than 30%. Identifying this customer segment would provide a large opportunity to accurately price them at a higher premium.

The increasing cost of living has driven customers to look for cheaper insurance options, with most of this search taking place online. Our data analysis has found that nearly one-fifth of the younger population between 20-30 years old are manipulating the information submitted in these quotes to reduce premiums by more than 30%. Quote manipulation rates decrease in the older age brackets.

Read the paper to know more