Measures to catch out customers "lying about age, claims history and occupation"

KGM Motor Insurance is using its broker partners to investigate customer fraud online.

Brokers offering quotes on their own sites, as well as some offering on aggregator sites, have told KGM that customers are lying to obtain cheaper quotes.

The feedback comes from KGM-organised meetings, which take place four to six times a year, with the participation of 80 brokers.

KGM group development director Doug Phelan said customers are lying about age, claims history and occupation.

Phelan said: “We know of one broker who gets calls on a regular basis from people who ask whether they check for no-claims bonuses proof. If the broker says yes, they immediately put the phone down.

“We had somebody that worked in the licence trade putting themselves down as an office worker. It’s that sort of thing that’s happening.”

Another problem is that customers do not understand the information inputting process, and therefore become muddled and submit inaccurate information.

KGM is asking its 80 brokers for information on the key issues and will then decide how to apply the research. Phelan, who will carry out the research with the help of leading underwriter Colin Hart, said the systems being used on aggregator sites are similar to those that brokers have been trained to use.

Hart said one of the problems is that the online systems have been broadly similar over the last 20 years and have not updated to deal with the customer, who only has a basic knowledge of insurance.

Phelan said: “We should be making sure we have the right risk, on the right premiums, with the right books.”

The Office of Fair Trading is currently deciding the scope of its investigation into price comparison sites. It is thought to be looking at technical aspects of price comparison sites that could confuse or mislead customers, such as opting in and out of ancillary products, promises of discounts and time-limited deals.

Aggregators have hit back at criticisms from brokers, pointing to the FSA’s review of financial comparison sites in November 2008. Although the FSA said areas needed improving, it concluded that firms were “consistently providing clear, fair and not misleading information”.