Fronting – or the practice of enlisting a higher risk motorist as a named driver instead of the main driver in an insurance policy – has been described as “a real problem” for insurers, and now LexisNexis Risk Solutions aims to help stop the fraudulent act in its tracks via a new two-stage approach that it says is a first in the UK.
In its Quote Intelligence quoting platform, the data and analytics firm has added a named driver module to detect the risk of named driver fraud at point of quote. The system is able to flag if quotes have been manipulated, based on quoting behaviour, and uses named driver attributes to identify potentially fraudulent applications.
Examining quote information from more than 80% of the motor insurance market, LexisNexis Risk Solutions has found that drivers aged 17 to 20, compared to any other age group, are nearly twice as likely to manipulate the information they input for insurance quotes. A normal scenario sees the young motorist switching positions – main driver to named and back – on a policy to try and find lower premiums.
The second half of the approach involves LexisNexis Risk Solutions’ insurance-specific customer verification and enrichment tool called Risk Insights. This stage of the process builds “a picture of risk” for the named drivers.
“Fronting is a real problem for the industry – our own research found 29% of people admitted to ‘fronting’,” noted James Burton, director of product management, insurance, UK and Ireland. “At the same time, ghost broking is on the increase.
“IFED (Insurance Fraud Enforcement Department) recently reported that over 850 reports of ghost broking had been recorded in the past three years. In some cases ghost brokers will add named drivers to a genuine policy without the policyholder being aware.”
As part of the process to tackle fronting, LexisNexis Risk Solutions said several factors are verified and combined, with the goal of providing a risk assessment of the named driver on top of that of the prospective main policyholder.
“The Quote Intelligence named driver module works by looking at the components of all individuals on a quote and making comparisons,” explained Burton. “One of these is comparing the surname of the proposer to see if it is different to the named driver. A potential fronting indicator could be where an individual has appeared as the policyholder for one quote, then appeared as a named driver on a separate quote for the same vehicle.
“It also verifies other factors such as the number of drivers and how this changes through the quoting journey, potential family relationships between proposer and named drivers, and named drivers who have the same surname as the proposer.”
He said the combination of Risk Insights and the new module “delivers insights around named driver risk that have simply never been possible before.” Calling the tools “powerful,” Burton said they will assist in identifying possible cases of fronting – enabling insurers and brokers to pose the right questions prior to policy inception.
