Verisk Insurance Solutions announced the launch of GarageConfirm, a new service to help insurers verify garaging addresses at point of sale and renewal. The service uses license plate recognition technology provided by Digital Recognition Network (DRN), previously available only to law enforcement and auto lenders.
Garaging fraud, also known as “phantom garaging,” generally occurs when consumers register and insure a car in one place but keep and primarily operate it in another (typically in a location where insurance rates are higher) as a tactic to lower premiums. An estimated $2 billion in auto premiums is lost annually to garaging misrepresentation, and recent Verisk studies indicate the problem may be even more serious.
“Rate evasion plagues the insurance industry, amounting to billions of lost dollars for insurance providers and higher insurance costs for the public,” said John Cantwell, vice president of auto underwriting at Verisk Insurance Solutions. “Garaging fraud often goes undetected, and until now, it hasn’t been easy to identify. GarageConfirm provides unique vehicle location data and analysis to help insurers identify the garaging address.”
GarageConfirm taps into DRN’s vehicle location database – the largest of its kind – which contains more than 4 billion license plate sightings. GarageConfirm then measures the time, frequency and proximity of vehicle sightings relative to a given address. Capturing geospatial data and grouping it into clusters of sightings, GarageConfirm tells insurers where a vehicle has recently been. Insurers can use the data to determine the validity of garaging addresses and commuting mileage, spot red flags that need further investigation, and recover lost premium.
“While GarageConfirm is well suited for high-cost, high-rate-evasion areas such as New York, many cases of fraud occur in low-cost or even rural settings where the customer claims to garage the vehicle,” said Alex Young, vice president of risk solutions at DRN. “Insurers will find GarageConfirm invaluable at the underwriting stage to write and price policies correctly and also during renewals for continuous rating integrity.”
Source: Verisk Insurance Solutions
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