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Aviva Motor - Fleet

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For Broker Use only

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Overview

revenue€207m 91%

Motor Fleet

Fraud Update

Aviva Broker Website

For Broker Use only

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Goal :- Ensure Consistent Pricing Approach :-

Removing premium volatility and allowing customers to financially plan

How :- Information led Underwriting and new Rating strength approach

Motor – Fleet: Our Goal

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Aviva Motor Fleet Strategy

✓Clearly defined risk appetite

✓ Information led underwriting

✓Pricing Sophistication – Improving the quality & confidence in

technical pricing

✓ Innovative Propositions

✓ Integration of Driving school – Pilot 2019

✓Risk Management and Technology

✓ Support Commercial Composite in target sectors where sustainable

levels of profitability can be achieved - Customer Composite Model

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Aviva Risk Appetite – we can quote for most fleets

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Most Segments are Acceptable to Aviva &

include;

➢ Banks / Accountant / Financial institutions

organisations

➢ Loss Adjusters / Surveyors

➢ Health and Safety firms/consultants/Installations

➢ Electrical Contractors/Alarm Install / Trades

➢ Delivery/Installation of Home appliance/goods

➢ Building Trades/Construction

➢ Wholesalers / Warehouse / Packaging risks

➢ Food and Beverage risk

➢ Manufacturers of heavy/light goods

➢ Haulage Contractors

✓ Generally good claims experience

✓ Low claims frequency / low level of insured at

fault collision incidence

− Plant and Machinery Operators and

Contractors (except for Plant & Machinery

Hire only risks which are Decline)

− Civil Engineering Contractors/Road

Works/Cable/Pipe-laying Contractors

− Haulage Contractors

− IT consultants / Support services

− Limited Airside Exposure (Contractors not

beyond red line with time defined

contracts)

− Features needed to consider;

➢ 3 years Claims experience

➢ Minimum overseas exposure less than

30%

➢ low level of inexperienced drivers

➢ Improving claims experienced evidenced

over 5 years

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Aviva Risk Appetite –

Areas we don't wish to expand our footprint

Carriers of explosive, corrosive, inflammable, toxic or hazardous goods

Couriers and parcel, letter & newspaper delivery, Multi-drop and/or time critical occupation

Scrap Metal Merchants

Self–Drive Hire - Car/Van/Plant Hire

Contract Cleaners

Waste Disposal Contractors/Refuse collection/ Skip loaders

Public/Private Hire Risks - Taxi / Hackney / Coach Risks

Bread / Milk Delivery – Door to Door

Sand and Gravel only

Cash in transit risks

Family Fleets – Private Fleet

Vehicle types - Unacceptable vehicles (exceeding 30-50% of vehicle schedule);

▪ Tippers/Skip Loaders

▪ Low loaders

▪ Long Load vehicles

▪ Mini bus

▪ Livestock carrying vehicles

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✓ Schedule of vehicles with full details regarding engine/carrying capacity, current

values, ages, registration and cover required

✓ Business/Occupation and purposes for which vehicles will be used

✓ Address of Proposer

✓ Schedule of drivers including names, ages, class of Licence and previous

driving/accident/conviction history/penalty points

✓ Claims experience of the fleet during the past 5 years & Amounts

paid/outstanding estimates for each individual claim should be requested to enable

the correct capping of claims to be applied.

✓ Vehicle numbers for the past 5 years

✓ Completed Fact Find for that segment

Information led Underwriting Fact Finds, Risk Management & Vehicle Technology

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Motor Fleet Fact Find – Why we look for one?

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✓ Establish level of risk management practices in place

✓ Assists in identifying well managed risks

✓ Enables us to be more discerning in our risk selection &

pricing

✓ Identifies better performing risks to protect

✓ Assists with exiting/ improving poor quality business

✓ Enables underwriters to write risks which have lower

potential exposure to large claims

✓ 5 distinct Fact Finds

REMEMBER - YOU CAN

FILL THESE IN AS PART

OF THE CLIENT REVIEW

ON BEHALF OF

CUSTOMERS

Information led

Underwriting:

helps us get the best

price to you first time

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Motor Fleet Fact Find – What does it cover?

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✓ Simple form to collect basic risk management information

✓ Driver Vetting & Induction – Driver application form, Driving history,

claims, convictions & Penalty points

✓ Drivers Handbook – Setting out driver responsibilities and company’s

policies and procedures

✓ Licence Checks – Periodic analysis

✓ Incident Reporting – What to do in the event of an accident &

investigation

✓ Driver Profile – Age profile and driver turnover

✓ Historical Vehicle Numbers – A pricing modifier

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Key Actions to Drive Sustainable Fleet Business

Consistent Pricing Approach –> Removing premium volatility

Information led Underwriting –> Fact Finds, Risk Management & Vehicle Technology

Driving Cross Sell -> Continue to build on relationships through Cross Sell opportunities and innovative solutions

Propositions -> Piloting training and risk management solution for fleet customers

Profit Shares on Large fleets –> Rewarding customers for the long term performance

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Fraud Detection

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Objective of Fraud Detection

A key feature of an insurance contract is one of utmost good faith.

An insurer quotes an appropriate premium to insure a specified risk based on the full disclosure of all material and relevant facts. The nature of an insurance contract is such that both contracting parties need to be aware of all material terms of that contract and unless the insured is fully informed the contract could be undermined by the parties providing false or incorrect information – this could result in a breach of the fundamental requirement of utmost good faith. Any such breach could result in a significant financial impact for the policyholder in the event of a claim, for example with motor 1) any accidental damage claim would be declined (thereby leaving the policyholder and named drivers at a financial loss) and 2) in the event an insurer is required to deal with a third party claim under Section 76 of the Road Traffic Act of 1961 we may seek a recovery for any outlay incurred from the policyholder

Customer Protection - Think

1. How we as underwriters / advisors can assist the Insurance consumer in submitting the correct information to give the full picture of the risk in question,

2. How underwriters / advisors can extract the relevant and key information to make a full and true assessment of any particularrisk

Ultimately helping to protecting the individual customer from non-disclosure / misrepresentation

Underwriting & Broker Protection - Think

How preventing fraud ensures that all policyholders (current and future), premiums & coverage is protected in the longer term.

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Protecting the customers – Fraud Detection

Fraud detection protects the customerThe identification of key indicators allows us to investigate, discuss and ultimately help educate the customer for their ownprotection.

The CPC requires a regulated entity to explain to a consumer, at the proposal stage, the consequences for the consumer of failure to make full disclosure of relevant facts so by identifying key indicators of potential fraud or non-disclosure (which may be “Innocent”, “Careless” or in fact “Deliberate/Reckless”) we can help to ensure the consumer fully understand the importance of disclosure of facts and direct them to what is most important.

Many situations can be “Careless” misrepresentation/non-disclosure by the customer, who may think:

– I thought that it was not important!

– I did not know how to answer the question!

– I thought this was the best way to insurer my son/daughter – fronting (grandparents - vulnerable consumer…CPC Requirements)

– I thought it was a standard feature of the car!

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Types of Insurance Fraud

Opportunist Fraud1

stparty fraud

➢ Motivated by financial circumstances➢ Perpetrated by genuine individuals

✓ Misrepresentation –

• Manipulating address

• Manipulating age

• Incorrect occupation

• False NCD (No Claims Discount)

✓ Non disclosure -

• Previous claims

• Motoring convictions

• Previous voidance

✓ Exaggerated or fictitious claims

✓ Fronting

= Approx 80% of known fraud

Organised Fraud 3

rdparty fraud

➢ Motivated by greed➢ Perpetrated using identities of others and false identities

✓ Organised motor fraud

• staged accidents

• Crash for cash

✓ Fraud rings

• a number of seemingly honest claims with suspicious links

between them

• ghost brokering

✓ Identity theft

✓ Fictitious of falsified parties

• including garage repairers, doctors, supplier inflated invoicing

✓ False payment details - no intent to pay

✓ Exaggerated or fictitious claims

= Approx 20% of known fraud

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Types of Insurance Fraud - Fronting

‘Fronting’ is a term used within the insurance industry and refers to the situation where parents, or sometimes Grandparents obtain, in order to avoid the much higher cost of a young or inexperienced driver insuring a vehicle, a vastly reduced premium and better terms by disguising the fact that their child / grandchild is the main user of a vehicle (and sometimes even own the vehicle) under a Personal Lines or Commercial Motor policy.

Why does Fronting occur?Fronting occurs because the cost of insurance for young or inexperienced drivers is recognised as being very high compared to that for older and more experienced drivers.The issue is made worse by the fact that:

1. The public don’t understand why insurance companies charge premiums that amount to more than the value of the vehicle being insured. “My car is only worth €1500 but the premium that I’ve been quoted €1800?”

2. Most young drivers are still financially reliant on their parents and as such the parents are more than likely responsible for the majority of the costs associated with providing their son / daughter with a car and keeping it on the road.

3. It’s hard to make any real savings on motoring costs: car tax, servicing, NCT and fuel etc, BUT if you give your insurance company some inaccurate information then you’re likely to make a substantial saving.

4. Tradition in Ireland of how to get a son/daughter/grandchild motoring - they perhaps don’t realise the fact, that their actions could cause them big problems if they were ever to have a claim.

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Fronting - Identifying Fronting

o Often the ‘fronted’ vehicle is a high performance car and totally unsuited to the young driver’s age, experience, driving behaviour and attitude.

o Often the ‘fronted’ vehicle is one which you would not usually associate with the proposers / policyholders age, occupation etc. e.g. a Solicitor driving a 1989 1.0 fiat cinquecento which is bright pink and happens to have his 17 year old student daughter as a named driver! Is this in keeping with what you might expect? Should you check if he has another car?

o Mature proposer with no previous insurance looking for an introductory NCD, for named driver experience, and then looks to add a young driver on the policy at inception or shortly after the policy is incepted - may be low valued or old vehicle involved

o NCD received/ issued, post inception, has a;

➢ different renewal date v inception date

➢ different vehicle covered or class of vehicle

o Modifications – higher tendency for younger drivers to have modifications (body kits, spoilers, lowered suspension, expensive audio systems ,exhaust mods etc.)

o Inception/renewal dates ties in with a young driver’s birthday or date driving test was passed/licence issued

o Young driver involvement - Be cautious if a young named driver is involved in the set up of the quote, ringing us directly to make changes or provide credit card details for payment. Ask yourself why a young driver would do this for their parent’s vehicle! ……. Nominated person - why???

o MTA – Alterations around renewal or just post inception – adding drivers or changing to a fronting type car (cc, year of vehicle increased number of owners)

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Questions: ‘Fronting’ is a difficult situation, so when requesting a statement from the client it may be necessary to pose specific questions to them in an attempt to get to the bottom of things:

1. Do you own/insure any other vehicles (cars/vans)?

2. Do you have use of a company vehicle?

3. Do you have access to another vehicle to drive on a regular basis?

4. How many vehicles are in the family?

5. Who is the main driver of each vehicle?

6. Where is the vehicle in question kept or mainly used?

7. Who finances the upkeep of the vehicle (i.e. tax, fuel, maintenance/servicing, NCT etc.?).

If any modification are declared ask for details, including receipts/invoices, of the modifications these show who carried them out and perhaps who paid for them.All of this evidence strengthens our position in trying to identify fronted cases.

“Who is the vehicle really intended for???”

Fronting - Identifying Fronting

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Why is fronting a serious issue for Insurers and customers?

Fronting is a very serious issue for all channels across Aviva and the motor insurance industry as a whole because:

1. We aren’t getting enough premium for fronted young driver risks

2. This increases premiums for other customers

3. Impacts on overall profitability

4. The public perceive there’s nothing wrong with fronting

5. Our customers may not have their claims paid

6. Preventing fraud ensures that all policyholders (current and future), premiums & coverage is protected in the longer term

Fronting – Why is it an issue

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support!Aviva Insurance Ireland Designated Activity Company, trading as Aviva, is regulated by the Central Bank of Ireland