by Robin Wagner

News that the UK insurance industry is prioritising big data in 2016 will not leave the South African insurance industry on the hop. Thanks to the Insurance Data System (IDS) created by risk and information solution provider TransUnion, under the guidance of the South African Insurance Association (SAIA), our local short-term insurance industry can offer big data functionality that is of a world-beating standard.

Where IDS began

IDS was conceived in 2001 to house information for the insurance industry and combat insurance-based fraud, as well as offering beneficial insights. The data collected in this comprehensive database includes information from the majority of the country’s personal lines claims, and policy information from various members within the short-term insurance industry.

We live in a data-driven world, making it crucial for businesses to harness information and use it to their benefit. The information in the IDS allows critical variables to be used for analysis, including credit data and previous coverage, for example insurance policy duration and breakages in coverage linked to an individual. Among other noteworthy uses, this has been beneficial to the SA Insurance Crime Bureau for the identification of fraud patterns, fraud indicators and fraud syndicates.

Adding even more value

In 2012 an updated version was launched, which included a new layout for the submission of data, streamlining the process. Today, there is a 95% participation from IDS members submitting information on a daily basis.

This granular view of claims – both current and historic (up to 7 years) – provides insight into claims behaviour, where claims are higher or lower in the country and the potential causes. The data, at an aggregated level, can inform policy, drive strategies and provide insurers with the insight they need to achieve a competitive advantage through improved customer service, smarter product development, risk pricing and selection and so forth.

A more in-depth look at fraud

During tough economic times, fraud incidents are sure to increase. For example, according to recent insights from IDS, it was noted that close to 0.5% of all claims in 2015 were from individuals recorded as deceased for more than a month.

There are a number of plausible explanations for this, including the partner of a deceased individual holding onto a policy in the deceased’s name to minimise admin. However, there are also apparent cases of fraud, whereby a policy is opened with a false ID number with the intention of submitting fraudulent claims. The statistic of 0.5% may seem small; however, this can potentially result in an estimated R470 million in fraudulent claims.

Information is power

These examples all provide a clear indication of how IDS can benefit the insurance industry by providing greater insight into risk selection and pricing. The increased submission of data to IDS provides even more information for analysing, and TransUnion’s access to other data sets, such as public records from Home Affairs for the validation of information, essentially offers the insurance industry richer, more accurate data to improve its analytical ability. Credit data is also added to the mix as an additional resource to qualify the integrity of the data, answering such important questions as does this individual exist, is this the correct address / telephone number, and so on.

By virtue of its data access, TransUnion provides quality data and data with integrity. Additional data sets provide additional value to the insurance industry as a whole, allowing the industry to monitor potential claim threats or changes as well as monitor fraudulent activity, and improve customer services.

Robin Wagner is Vice President: International Insurance, TransUnion