VeracityID: Stopping Fraud before it Starts

CIO VendorJohn Macauley, CEO & Founder
Insurers rely on multiple complex data sets to make instant decisions about whether to accept risks today—whether in an agent’s office, in a web app or via a mobile service. Their challenge is that the data they rely on to make offers is from many sources— internal systems, third party vendors and customers themselves—is full of conflicts, omissions and errors. Errors that result in mispricing and facilitate fraud that might once have been caught by agents or underwriters, but which are often overlooked in today’s rush to instant binding. The result is that tens or even hundreds of billions of dollars are lost every year to fraud that could have been prevented if the insurer had the ‘right’ information at the ‘right’ time. VeracityID says today’s insurers need to know: “Can I predict, prevent and mitigate fraud risk before I close a sale, and how I can monitor changes in risk as circumstances change?”

Answering this question is Reno, Nevada-based VeracityID—a SaaS platform company that leverages ‘big data’ analytics to improve insurer bottom lines by identifying and interdicting fraud risk during the sale and continuously thereafter. VeracityID offers a highly configurable platform called idFusion that leverages advanced analytical techniques such as entity resolution, social network analysis, anomaly detection, and business rules to attack fraud as it is introduced into carrier networks.

As John Macauley, CEO puts it: “The key to reducing fraud is organizing all relevant data into a fused, networked view of carrier books that allows them to identify and measure specific risks and intervene to resolve or otherwise mitigate them during a live customer session.”

idFusion serves as a comprehensive “data defect detection and integration platform” that allows carriers to merge their own data with third party and customer-provided information to make informed decisions during a sale and thereafter.

By identifying the address and attaching a GPS location along with all the information on all the associated policies, we give a full map of what it is that triggered this 'bad neighborhood of data'

idFusion does this via web service calls that enable carriers to identify measure and resolve defective policy data to right-price risk, and employing social network analytics to identify and assess suspicious behavior. idFusion contains idWorkbench to enable users to identify and manage new sources of risk, idBatch to monitor the existing book for new risks each day, idRealtime to assess live applications for anomalies, a suspicious entity risk score it calls ‘TrustMark™’, and idResolve to enable carriers to intervene during live customer sessions through a carrier-defined risk resolution process.

idFusion leverages advanced tools to enable carriers to find their own weaknesses—and take action to prevent fraud losses. Macauley says: “Fraudsters today use advanced technologies to probe and attack weaknesses in carrier underwriting processes. idFusion uses these same types of technologies to find and stop them in their tracks.”

In one instance, the firm conducted a series of analytics on claims outcomes associated with different driver types. As Macauley puts it, “We discovered clusters of claims in high premium states that were generating losses that were double the average loss for policies in the same geographies.” An investigation revealed that the drivers on these policies were not listed on the policy—but lived at the rating address—and had bad driving records. “Customers knew these were bad drivers—and left them off their policy to avoid higher premiums.”

VeracityID’s believes that its approach to measuring network risk will become ever more powerful as the economy progresses towards the Internet of Things and it becomes possible to ‘measure how risk is impacted via unexpected connections.’