A recent study conducted in 2021 by Finder found that 38.5 million Americans lie to insurers for lower auto rates. This is equal to about 14% of the American population! This number is a dramatic increase from the 2020 survey, where 11.8 million drivers admitted to lying on their applications. With insurance premiums and risky driver behavior on the rise, more drivers will likely continue to lie to cut costs. How can insurers combat this driver fraud?
Most Common Lies on Auto Insurance Applications
Below are the results from Finder’s survey showing the top eight lies drivers tell on their auto insurance applications:
- Lied about crash history – 30.1%
- Used an inaccurate address – 29.7%
- Lied about how they planned to use the car (i.e. delivery driver) – 26.6%
- Didn’t report all the drivers for the vehicle – 26.3%
- Lied about ticket history – 25.5%
- Lied about who the primary driver is – 18.1%
- Lied about the actual parking location for the vehicle – 18.1%
- Didn’t include all owners of the vehicle – 14.7%
Why Do Drivers Lie to Insurers?
According to a past Finder’s survey that was conducted in 2020, policyholders admitted that they lied on their insurance applications because they knew they were a higher risk and would have to pay more for their premiums if they told the truth. According to Finder, when it comes to cost-savings for dishonest drivers:
“On average, car insurance fibbers thought they saved an average of $362 each month. However, roughly three-quarters of respondents estimated they saved less than that each month, which is probably why the median amount saved according to respondents was a more modest $104. That’s an annual estimated savings of an average of $4,342 or a median of $1,249.”
It was also found that the younger the driver is, the more likely they are to lie on their insurance application. Finder states that 22.5% of millennials, 18.1% of Gen X and 17.9% of Gen Z said they aren’t always truthful with their insurers. In comparison, only 4.0% of baby boomers and 3.4% of the silent generation said the same.
How Do Insurers Combat Driver Insurance Fraud?
According to the Insurance Journal, anywhere from $80 billion to $200 billion is lost to fraud each year among all lines of the insurance industry. Having the right tools and team in place to detect fraud is critical in maintaining profitability, especially during a downturn. An economic recession only further increases cases of insurance fraud.
To win in a competitive insurance market and remain profitable, carriers must transform their strategy, bringing driver data to the front end of the insurance shopping process in the following ways:
Confirm an applicant’s identity
Fraud can take many forms, from something as simple as changing a zip code or license number to making false claims about not having a U.S. driver’s license. By leveraging license discovery tools, underwriters can validate an applicant’s identity with ease. These tools make it easy to determine if an individual has a valid U.S. license, while license validation tools can verify that the information provided by an applicant matches records maintained by the Motor Vehicle Administration.
Access critical driver history data
What if there was a way to identify which prospects are high-risk without pulling an MVR? SambaSafety’ allows you to prefill driver applications with full violation activity at an affordable cost. Your team can set rules and “configurable triggers” around critical violations that are necessary to know about when analyzing potential risks, such as DUIs or more than one major violation. The solution makes it easy to separate clean drivers from those who present the most risk, ensuring your team will never again waste time and money pulling a clean MVR. Furthermore, underwriters will be able to provide accurate quotes to clean drivers in a breeze.
Pull MVRs only when necessary
By identifying high-risk drivers with the click of a button, you can then decide which of those drivers are worth pursuing and ONLY order MVRs for that population.
Get Ahead of Insurance Fraud
In our webinar, The Secret’s in the Numbers: How Top Insurerers Are Leveraging Data to Gain a Competitive Advantage, we share strategies for how carriers can capitalize on data to win business no matter the state of the economy. Click the link below to learn how you can access the right data early in the lifecycle, target lifelong customers and optimize the underwriting process to save time and money.