How an insurance claim database can work against you

Bogus claims cost the insurance industry £2.1 billion a year adding an extra £50 on premiums paid by insurers. To reduce the occurrence of false claims, insurance companies make use of the Claims and Underwriting Exchange (CUE) a centralised insurance claim database. Basically, insurance companies share information of insurers to determine if there are no duplicate and fraudulent claims.

How it works

CUE has info on all home, motor or personal injury and accident which might or might not result to a claim. The way it works is insurance companies are able to share information about customers. Thus, when you apply for a policy, the insurance claim database will show how many claims you have made in the last few years and determine your risks to the company.

  • Advantage

The major advantage of an insurance claim database is that it is easy to pull out information of a potential client when policy applications are made. It shows the history of payments, claims, and even accidents. However, it is more advantageous on insurance companies because it minimises their losses since they can track the insurer’s claim history and even decide at that point if they award the claim or not.

  • Disadvantage

There have been instances though when even calls for a possible claim that did not go through are logged and counted against you. In such cases, insurers might even be denied insurance or are quoted higher premiums than usual the next time they apply or renew a policy. Higher insurance premiums which are impossible to pay might leave an individual with no insurance at all.

So yes, an insurance claim database has the potential to reduce risks and losses in the industry, passing savings to consumers in the form of lower premiums. But, it can also work against insurers making them vulnerable to higher premiums and at worst, unable to afford an insurance at all.

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