“Why Don’t Insurance Companies Just Share Data With Each Other?”Mon, 18/08/2014
It’s a question which is often asked by purchasers of insurance and one which doesn’t really have a definitive answer. Insurance companies do share some information with each other but this usually takes the form of double checking information which has been received rather than proactively searching for information on potential customers.
Why do I have to provide information and documentation to insurance companies?
If you decide to change any of your insurances to a different insurance company or broker you may be asked to provide certain information or documentation to support the details which you have provided in order to obtain the price that you received. The most common of this is proof of no claim discount which can be sent in via documentation or by the policyholder providing the relevant information to their insurance company which can be checked with your previous insurance company.
The reason why you will be asked to provide this information to your insurance company is because they are unable to gather this information for themselves due to data protection laws and the lack of databases available to them. Current data protection laws prevent the unnecessary storing and sharing of personal information which causes insurance companies great difficulty in obtaining their customers information from other insurance companies. However, the law isn’t the only reason why insurance companies are finding it difficult to obtain information. Many insurers are reluctant to share information with other underwriters as they fear they will be giving away their competitive advantage.
Your insurance company may also request further documents from you in regards to your policy at any time if they are unable to verify details from the several databases which are available to them. Such examples of other documentation which they may request from you are: driving licences, MOT certificates, Engineer’s reports (if vehicle has previously been labelled as a write-off), and utility bills.
What databases are there and what purpose do they serve?
Claims Underwriting Exchange (CUE): Records all data evolving from motor, home and personal injury claims regardless of whether an insurer later agrees to pay out. The purpose of CUE is to record all claims on a single centralised database and to keep down premiums for honest policyholders by preventing multiple claims fraud and the misrepresentation of claims histories.
Insurance Fraud Register (IFR): Founded in 2013 and funded by the Association of British Insurers (ABI) it is a list of all people who have been convicted of insurance fraud. It is designed to reduce premiums of honest members of the public.
Motor Insurance Anti-Fraud and Theft Register (MIAFTR): Record of all vehicles which have been declared as a “write-off” due to an accident or have been stolen and not recovered Is used to prevent fraudulent claims.
My Licence Database: Came into force in June 2014 and is linked to the DVLA database. Shows the status of each driver’s licence including any endorsements. Purpose is to allow insurance companies and brokers the chance to make sure that the information they have been provided with is correct.
Motor Insurance Database (MID): National database which shows the insurance status of each registered vehicle in the UK. Shows if the vehicle is insured and the identity of the insurance company. Works with the DVLA and Police to combat uninsured driving.
In what circumstance do insurance companies access these databases?
Not all insurance companies are able to access all of the databases and some may only be able to access them under certain circumstances due mainly to restrictions imposed under the Data Protection Act. Any information which you provide to your insurance company or they source from the databases must be processed, and stored, under strict rules imposed by this Act.
The CUE database can be accessed by any insurance company and intermediary in the UK and can be used to see what previous claims a person is recorded as having. There is an industry-wide acceptance that insurance companies and brokers will search CUE only when a new policy is incepted and if the policyholder decides to make a claim.
The IFR is available to all insurance companies within the UK and can be accessed by insurance company’s claims and underwriting departments when processing a claim or deciding to accept a particular risk.
MIAFTR can be accessed by claims departments of insurance companies when processing a claim. It can be used as part of their standard fraud checks whenever a claim notification has been submitted.
The most openly available database is MID which is available to members of the public who wish to check that their own vehicle is fully insured. It is also available to insurance brokers and insurers who wish to check the insurance status of a vehicle. The most likely event when an insurer would need to conduct a search of the MID is if a third party vehicle has been involved in an incident with a vehicle they insure and details of the other vehicle insurers have not been provided..
The newest database should save you a lot of time and hassle. As of June 2014, you will no longer be required to provide proof of your driving licence to your insurance company/broker as they will be able to access to this information through the “My licence” database at the time that you take out the policy.
It’s important to remember that although these databases are in place the onus is still on the policyholder to provide accurate and truthful information to their insurance company. The databases exist as a means of checking information in order to reduce both insurance fraud and, ultimately, premiums.