Eliminating Fraud at the Point of Submission: New Data and Techniques for Commercial Trucking Underwriting

The End of Underwriting Tradeoffs

Insurance fraud costs U.S consumers and businesses over $300 billion annually, creating a major obstacle for underwriters looking to make important, data-driven decisions. .In fact, the insurance industry has seen the largest year-over-year increase in digital fraud of any sector, at a staggering 159%  – and the commercial trucking industry has not been spared in the crossfire

In a recent webinar from Insurance Quantified, in partnership with driver risk platform SambaSafety, industry professionals unpacked the current state of commercial trucking, how fraud can fall through the cracks and how underwriters can use data and technology to help eliminate it. The panel featured Joshua Nolan (Product Manager at Insurance Quantified), Dave Michelson (former CEO and President of National Interstate Insurance Company) and Grahm Saunders (Senior Solutions Consultant at SambaSafety).

The discussion began with an overview of the stress points impacting the commercial trucking industry. Today’s carriers are under immense pressure due to driver shortages and high turnover rates, as well as rising fuel and maintenance costs intensified by inflation. On the commercial underwriting side, underwriters are facing a difficult market with an increasing number of nuclear verdicts.

The conversation then turned to the meaning of “fraud” in the commercial trucking industry. Joshua explained that the term can refer to any misinterpretation of data, whether intentional or unintentional. It can be as mild as an accidental slip-up or use of outdated information, or as severe as intentionally forging or misrepresenting documents. Either way, both forms of fraud result in negative and costly consequences – most significantly at the point of a claim occurring. “Fraud becomes a pollution point…If you don’t have the appropriate controls, operations and workflows to root it out, the fraud will pervade your entire system,” stated Joshua.

The panelists then discussed the negative consequences of underwriting fraud and why it so often falls through the cracks. When fraud goes undetected, Dave explained, you end up with both a higher frequency and higher severity of claims than originally anticipated, resulting in a worse claims experience overall. Grahm then offered his perspective: as we continue to transition to a digital world, industry players need to implement technology in the underwriting workflow and tailor their processes to today’s consumers. 

The panelists agreed that fraud often flies under the radar due to key challenges in the underwriting workflow. Large underwriting teams tend to be siloed and contained, hindering data visibility, while smaller firms often lack the resources for data verification. And regardless of their size, teams that still rely on legacy workflows are missing out on affordable, normalized data, as well as analytics tools needed to accelerate manual processes.

The solution? Human-machine partnership.

With the right blend of people and technology, the panelists stated, underwriters can detect anomalies and validate data early and often. The machines can automate the repetitive, non-analytical work, complementing the irreplaceable human ability to apply reasoning and thoughtful analysis. “Underwriting doesn’t work without underwriters, but there’s a place and a role for technology in this industry,” Joshua stated. Ultimately, he argued, software should enable revenue generators to make better, more rapid decisions.

By reimagining their relationship with technology, insurers can unlock value for their underwriters by giving them a “robotic arm.” Dave encouraged underwriting teams to embrace this change while acknowledging hesitancies about the ability for tech to truly make a difference in the day-to-day. To demonstrate the power of technology, Grahm showed how Insurance Quantified’s underwriting workbench performs triage early in the workflow to verify identity for expedited handling, or to flag those with false credentials for further review. The result: premium leakage and unnecessary MVR expenses are avoided, and exposure from “false clean” results and administrative mistakes is reduced. 

Dave discussed why these capabilities are particularly important when it comes to the commercial auto sector: “The industry has not made money underwriting commercial auto for over a decade…Every one of these sets of data, and the tools to dig into them, is critical to helping the industry improve their results.”  

To close, the panelists recapped best practices for using underwriting technology to help reduce fraud. Core capabilities for fraud detection include automated ingestion, data normalization, validation and enrichment, as well as data accuracy checks/scoring and configurable business results. Dave stressed the importance of finding an ongoing industry partner that can be trusted to provide custom solutions and enhance them over time. “You really want to look for an old-fashioned, time-tested partnership approach…a provider that will listen to you, understand your product and workflows and tailor solutions specific to your problems,” he stated.  While these insights are particularly relevant to the commercial trucking space, the operational efficiencies a trusted technology vendor can provide are applicable to all industries looking to combat insurance fraud effectively.

Thank you to all who attended this virtual discussion. You can view the full webinar here.

Interested in how Insurance Quantified can help your business eliminate fraud and other data challenges at the point of submission? Reach out today to find your edge.