Leveraging data and advanced analytics, a driving force for fraud detection and profitability

The auto insurance landscape is undergoing a seismic transformation amid the rapid emergence of advanced data analytics and digital technology. Changing consumer behaviors and the unprecedented impact of emerging technologies are revolutionizing insurers’ capabilities and strategies for a new era of efficiency and competitiveness.

Forward-thinking companies are investing heavily in digital platforms that harness the immense power of advanced analytics and artificial intelligence (AI). These innovations are streamlining operations, reducing costs, and elevating customer experiences. As a result, the insurance industry is moving toward real-time quoting, personalized product recommendations and other customer-centric advancements.

Yet, the most-compelling disruption is emerging among digital-first companies. These agile contenders are leveraging data and online channels to offer advantages that traditional insurers find challenging to replicate. By providing lower premiums, expedited claims processing and tailor-made services, these disruptors are reshaping the established norms of the insurance landscape.

Underwriting shifts to a new reality

At the heart of this transformation lies the evolution of auto underwriting. The integration of digital technology, automation and data-driven decision-making is fundamentally redefining the underwriting process. This evolution is characterized by several key changes:

• Real-time data and infrastructure: Insurers are overhauling their infrastructure and processes to deliver precise, real-time data and more informed decision-making.
• Incorporation of new data sources: To accurately assess risk and make informed underwriting decisions, insurers are tapping into an array of data sources – internal data from policyholders, external data from third-party sources, even insights from social media.
• Analytics and insights: Data analytics are being leveraged to reveal trends, patterns and insights that drive significant improvements. These range from enhancing customer experiences to bolstering operational efficiency and refining risk-management strategies.

How CGI supports insurers fight against fraud

Analytics tools are proving to be extremely helpful in fraud detection. Insurers are leveraging external data to validate customer information and better understand driver behavior. By combining predictive modeling with external data analysis, insurers can identify high-risk drivers with histories of fraudulent behavior or high-risk profiles; thereby, significantly enhancing fraud-detection capabilities.

According to the findings of the 2023 CGI Voice of Our Clients (VOC) program, data to improve underwriting and customer evaluation was cited as a top business priority among executives we interviewed. In response, CGI is working with insurers to provide innovative fraud-scoring tools such as our Exported VIN Predictor and Opportunist Fraud Score to identify high-risk applicants during the underwriting process. The Exported VIN Predictor assesses the likelihood of a claim when a customer’s vehicle is likely to be exported to another county, while the Opportunist Fraud Score predicts the potential for customers to inflate claim amounts.

Welcome to the next generation of auto underwriting

Our advanced analytics team is collaborating closely with major Canadian insurers to validate the effectiveness of these tools and associated data elements. Moreover, CGI’s loss-ratio score is helping insurers achieve premium/loss parity and improved profitability.

The industry is increasingly recognizing the value of precise, timely data and the immense power of advanced analytics. By leveraging insights to address customer behaviors, risk factors and potential fraud, auto insurers not only augment their offerings and efficiencies, but also deliver superior customer outcomes.

As the rapid pace of change continues to accelerate, insurers who fail to adapt to this evolving landscape risk losing their competitive advantage and market standing. Leading firms are recognizing the urgency of moving towards the next generation of auto-insurance underwriting – where data-driven insights play a pivotal role in driving competitiveness and reshaping the industry’s trajectory. The future is here and there is no time to lose in the race to innovate for a new era.

For a closer look at this topic and greater insights into data-driven innovations in auto underwriting, readers are encouraged to speak with Santiago Villasis, a recognized expert in the field. Additional insights can be found on the CGI website, offering a comprehensive exploration of how data analytics is the engine that is driving a revolution in the auto insurance industry.