The immediate consequence of manual systems and processes is that data collection is fragmented and only available in terms of gross numbers; it cannot be thin-sliced for detailed analysis or spotting market trends. For instance, every insurer has data on the number of claims made and processed in a given period. But wouldnt the data be a lot more significant if insurers could pinpoint higher or lower claims on a particular company, specific car model or geographical location This could help fix differential premia or provide early warning of fraud.
Common examples of fraud associated with this sector are issue of multiple insurance policies against the same vehicle to facilitate multiple claims or the fraudulent re-use of automobile registration numbers of junked/ totalled vehicles. Both usually happen with the collusion of insurance company officials, especially the latter, which involves a failure to comply with the legal processes. The biggest incident of fraud is by those who buy an insurance policy after a car accident to make a false claim by fudging the date of the accident. This, too, requires collusion by insurance officials and such deals are often brokered at gara-ges, which also add their own commission to the repair bill.
Automation is key to the rapid growth and reform of the insurance industry
Irda must begin discussion on scope and structure of a central database
Such a system will help eliminate the fraud of multiple insurance policies, by throwing up an alert of a pre-existing insurance on a specific car/engine/chassis number. The database is bound to contain the date of expiration of a policy and its renewal. Making it possible to flag a claim made too close to the issue of a fresh insurance policy, especially when there is a gap between its expiry and renewal. Similarly, cars junked when completely unusable will also have their details recorded on the database to prevent misuse by thieves or at least pinpoint failure in regulatory compliance.
Online processing of automobile claims is an $800 million business worldwide. An automated solution in India should include web-based automation processes, with a detailed back-end database of information on costs to speed claim processing with accurate and automatic inputs. In countries like the UK, automation service firms help upload data automatically from insurers to the regulators central database, with all proper security. In India, the creation of a central database will first require the automation of the claims processing system as well as the automobile dealer network within a specified time frame. Irda must kick off a discussion on the feasibility, scope and structure and quickly set an implementation deadline.