Nowadays, many claim managers mention that repair fraud is a huge issue. During my conversations and consults at several insurance companies I came across the following questions which insurers are dealing with:
• Which damages or repairs are genuinely related to a current claim?
• Which vehicles are actually imported with damage?
• Which repair shops perform incorrect repairs? (i.e. shoddy work)
• Why does a policyholder changes from repair shop?
• Why does a policyholder does not use a repair shop in its area of residence?
Repair and claim handling
For small repairs, the insured object is being brought to a repair shop, where the damage is calculated and repaired after a cover check has been performed. Generic contracts between repair shops and insurance companies make sure damages are handled as fast as possible, to maximize customer satisfaction. Therefore, the chance to detect and check for possible fraud is difficult.
Repair shop screening
Together with Solera Audatex FRISS developed a repair shop screening. Through this screening a fraud check is possible during the interaction between the repair shop and the insurer. A huge amount of historical Solera Audatex data, combined with data from the insurer, it is possible to get a more complete overview of the repair. During these steps, it is instantly possible to alert the claim expert and assess the repair (real time).
Let me give you some example cases.
Case I: A policyholder brings his car to a repair shop in his area of residence. The repair has been fixed successfully and all involved parties are satisfied. Unfortunately a couple of months later the same policyholder has another damage but turns to a repair shop that is significantly out of his area of residence. What could be the case here?
• The policyholder works in another area (missed opportunity for pick-up and delivery service);
• The policyholder has moved within the period of time;
• The car has become non-drivable;
• Or it might be a repair shop that sealed a deal
Case II: A policyholder has had a repair and 6 months later is looks like the same damage occurs again. This sounds suspicious, so an extensive check won’t hurt. Insures should ask themselves the following questions:
• Is the same damage is not claimed twice?
• Does this similar damage occurs because of shoddy work during the initial repair?
An additional check could result in a saving for not having to pay out the same claim twice or the policyholder could be redirected to the same repair shop where the initial claim took place.
Case III: A policyholder uses a repair shop that initially does focus spot repairs from specified brands, which does not match with the brand of his car. Moreover, his claim concerns a complex damage. The possible risk for insurance companies is that the costs for the repair could be much higher compared to a repair shop that is used to such damages. Furthermore, claims settlement time could be above average which influences customer satisfaction. When insurers are enabled to directly alert the claim expert and assess the repair, these risk can be covered.
Insurers’ audits on repair shops could also be much better targeted since the screening enables insurance companies to steer both the policyholder and the repair shop in case of a repair. This process can become more active and preventive instead of reactive (i.e. after the repair has been fixed and the claim has been paid). It would be beneficial for insurers to anticipate on specific claim and repair situations.
The repair shop screening will enable insurance companies to gain control of the straight-through-processing (STP) for repairs. This will minimize the fraudulent repairs and maximize the effectiveness of claim experts.