Auto Insurance and Information Technology

As the insurance penetration is increasing throughout the world there is a greater need for decisions to sustain and grow the business. The decisions have to be taken based on the information available and information technology (IT) plays an important role in providing the quality and type of information needed by the management.

The insurance companies can hire the services of external IT consultants or they may have their own in-house IT experts who may be able to help in designing the right systems of operations. The insurance companies are always keen to participate in motor insurance even though it is an attrition class of business. 

Motor insurance provides a bulk of business and also helps in retaining the customers, who provide composite business. If the management of this class of business is not done properly the insurance company may end up in losses. Most of the states have made it compulsory for the owners of the vehicle to have third-party insurance. 

Hence it will be impossible for motor insurers or composite insurers to stay away from the motor insurance portfolio. They have to learn to manage the portfolio in a more scientific way to make profits from the account. 

Claims 

The insurance company sells a promise to make good the financial loss incurred by the insured due to an insured risk. Hence the processing of the claims is very important whether you have expensive full coverage insurance or first month free car insurance plan. The processing of the claims has to stand the requirements of the regulator and the satisfaction of the customer. 

The IT will help in the various areas of claims processing like valuation of the risk, receiving the complaints in respect of inadequacy of the claim settlement, claim notification, checking the requirement of policy validity, premium payment, etc. Fraud is one of the important areas of claims management; IT will help in identifying the fraud and its indicators. It also helps in predicting the possibility of fraud. Controlling fraud will help in reducing the cost of claims for the insurers. The IT also helps in reinsurance recoveries in a well-organized way. 

Information Sharing 

Information sharing is an important area of motor insurance. Now with technology, it is easy to share the information related to the insured. In some countries, there are independent operators who link the insurance companies enlisted with them for sharing the information related to vehicles and insured. This will greatly help in addressing the fraud cases and dealing with difficult insured. The insurance companies may be asked to pay an annual fee, which will enable them to share the information and access the information required for underwriting and claims purposes. 

Controlling fraud 

Most insurers throughout the world are engaged in controlling the fraud. Here are some of the important steps which should help the insurers in controlling the fraud not only in their motor insurance portfolio but also in their overall operations. 

  1. The insurance companies should have proper internal checks and controls.
  2. There should have a zero-tolerance policy towards the employees who are involved in the fraud. 
  3. Insurance companies should educate all the stakeholders on the ill effects of fraud.
  4. They should have a dedicated email and helpline open for anyone to inform them about the fraud, a sort of whistle-blowing policy and the CEO should be directly involved in the investigations of fraud cases brought to their notice. 
  5. A timely investigation of the cases will help resolve the issues. Any delay in the investigation will jeopardize the results.
  6. Post repair survey for vehicles, where expensive parts are replaced will also help in controlling the fraud.
  7. Utilization of IT technology, nowadays there are many software and programs that help in giving an indication of fraud. They have to be utilized properly to identify the indications of fraud and further investigations.
  8. The insurance company should adopt a proactive approach to its underwriting and claims processes.
  9. Random auditing and investigation of the claims will help in identifying most of the fraud cases.
  10. The involvement of the top management in framing the fraud management policy will make the co-operation of all those involved in it a bit easier.
  11. An integrated approach should be adopted to address the issue of fraud by having a regular involvement of the insured, loss adjuster, garages, and other service providers. 

Make sure you offer the whole truth when filling out the form to get your car insurance. If you are caught committing fraud while applying for car insurance first month free or any other cheap coverage, the consequences can be disastrous. To get affordable insurance policies, just compare multiple insurance quotes and choose the one that best meets your needs.


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