Experian has partnered with Life Insurance Council to provide a platform to the Life Insurance Industry to share customer related data not only from the Life Insurance companies but also the banking industry and Aadhaar.
Experian Credit Bureau, India, launched the Hunter Fraud Management Services for the Life Insurance industry in India in March 2016. With this, Life Insurance companies in India will be a part of Experian National Hunter Closed User Group (CUG). This framework which went live on 3 March, 2016, is expected to help life insurers in the CUG cut losses on account of fraudulent claims according to Life Insurance Council, an industry association. The framework will run analytics and provide data discrepancies to help life insurers identify fraudulent claims. Industry experts say, the insurance industry is annually hit by fake claims to the tune of 20-22%.
The latest amendment in Section 45 of the Insurance laws Amendment Ordinance means that, no life insurer can repudiate a claim from a policyholder three years after the issuance. This means that a policy cannot be canceled on the grounds of miss-statement of facts—even fraudulent claims are protected. This is one of the reasons to have triggered the life Insurance Industry to huddle and form such a group to fight fraud.
Moreover there are 400 organised fraud management centers in India. On top of that, no data is available on such activities in the unorganised center. “There is no provision in the Indian penal code to punish the fraudsters committing Insurance frauds and thus no action can be taken against them,” says Manickam.
However the country’s largest life Insurer LIC hasn’t joined the consortium yet. “LIC is studying this proposition and it will take some more time for them to join, “said V. Manickam, Secretary, Life Insurance Council.
Experian India already has a database of 47 banks currently on Hunter – their fraud detection platform. According to Experian, the banking industry recorded savings of INR 4,002 crore in FY16 due to applications screened using National Hunter.
Hunter Fraud Management for identifying data discrepancies for Insurance CUG
As per the latest data, 17 life insurance companies in India have now signed on and are a part of the Experian CUG. Six out of these seventeen life insurance companies have already gone live or are in the process of going live with the Hunter fraud management services in April 2016. The companies include ICICI Prudential, HDFC Life, Kotak life insurance, Edelweiss Tokio, IndiaFirst Life, Aegon Life Insurance, Birla Sun Life, Reliance Life, Future Generali Life, Max Life, Exide Life, PNB Metlife, Aviva Life, IDFI Federal Life, Tata AIA, Canara HSBC OBC Life, Star Union Dai-Ichi Life
Experian will hold enquiry data of the Life Insurance companies in the consortium in an encrypted format. “That’s our business. We do this in multiple countries. Experian currently holds data of 47 Indian banks in National Hunter,” says Mohan Jayaraman, MD, Experian Credit Bureau, India
Basically, Experian ensures – whatever data is shared by the Insurance companies through their technology platform can be accessed on Experian’s site. “We don’t provide any applications to companies to host the data. What we are doing is taking the application data from the Life Insurance company, running it against a database, identifying discrepancies, if any,” In the case of a discrepancy being found, the respective Life Insurance company takes the corrective action accordingly.
There is no estimate available of the customer count of the seventeen Insurance companies who have already joined the Experian Hunter Closed User Group; however as a reference point, “the size of the repository that we run for the Indian banking sector is 400 + Mn records. The fraudulent data is separated from it.
In the fraud repository space for the Life Insurance sector Experian is now getting companies go live. As more and more applications are added on the Hunter platform from the Insurance companies, it will be a virtuous cycle, the good data and the bad data will be separated.
How the discrepancies will be identified
It’s a fairly simple process. Most companies already have the system to process an insurance application form. “What we will do is set up a small program, which will interface between the insurance company’s system and Hunter,” Then, depending on the type of Insurance buying platform, which can be an online purchase or a physical form – it will pick up these proposals and push them into Hunter for e.g. a proposal after being keyed in by the branch person or the intermediary or the customers if they are doing it online, it will all go into the policy system of the Insurance company. They will have a bridge from there, basically a communication link that will call Hunter and send this piece of information to Hunter. Hunter will process and send the information back with information about discrepancies. For e.g. out of the 100 applications, 5-6 seems may have a discrepancy.
Subsequently, the underwriting team will know which are these cases and will set up an automatic queue. The areas with discrepancies will be highlighted. “We have found that 70% of the cases can be resolved at the underwriting level itself,” There may be few cases which can be resolved after deeper investigation. For those cases, more information is asked from the local branches. In this process there is a continuous communication handshake between the Insurance Company’s local system and Hunter. Whatever changes – about the Insurance proposal being approved or declined has to be registered in Hunter too.
As far as KYC data is concerned, the data will automatically start flowing as the fifteen companies will start using the Hunter solution. “The good thing with Hunter is that it almost has the ability to modularly add referral database. What we do is we try to put the data that is the most useful to the customer at that point in time. Currently, we believe that the most important thing will actually be the existing banking data.
Reference data from banks, Aadhaar
Experian India already has a database of 47 banks currently on Hunter – their fraud detection platform. With life insurance companies coming under their purview too, both banks and insurance companies will be able to easily share data to prevent fraud.
With more than 50 per cent of the retail banking applications passing through Hunter on a monthly basis, It works as a closed user group of organisations, with the common intent of preventing fraud nationally. It screens and highlights potentially fraudulent applications, enabling organisations to identify fraudsters before they become customers. Experian is running the fraud solution for the banking Industry for the last three years. “We have the fraudulent customers’ details there. More importantly, 77% of the fraud is identity fraud,” So what is relevant in India, is not negative information, it’s actually positive information and Experian has positive information. For example, in case of a fraudulent application in the name of the genuine customer who has an insurance policy – it can be detected no matter if the application is coming from an Insurance company or the bank.
Experian is certified to access the Aadhaar database. National Census Data will also be available. The company doesn’t need to own that data as long as they can refer to it.