Challenging Insurance Fraud in 2019
It seems that 2019 was a momentous year for challenging insurance fraud. The government announced plans to fund an AI project designed to tackle fraudulent claims1 and major insurers such as Aviva have revealed an increase in fraud detection levels.
The Association of British Insurers (ABI) reported that in 2017 113,000 fraudulent claims were made, valued at £1.3billion. This was 8% lower than the 2016 number. Fraudulent property claims fell by 11% to 22,000 which demonstrates progress2.
The above said, more work is still needed, with fraud costing insurers millions in time and money. According to Insurance Post, premiums are unlikely to reduce – and they may even increase, inevitably penalising genuine customers3. So, what else can we do to challenge insurance fraud? The British Damage Management Association explores…
Investigative use of social media
Social media is increasingly being used to catch out fraudsters. The news is covering instances where individuals have posted content which contradicts the claim they’ve made with more regularity. Some are even naive enough to publicly discuss ‘getting one over’ on an insurance company.
Data Analytics v People
Data analysis is important in the fight against fraud. Link analysis,
statistical analysis and geo-location mapping can monitor and detect fraud patterns and data relationships. Additionally, it is used to highlight individual behaviours that may be fraud indicators such as excessively revising insurance quotes or having a long history of making claims. Data analysis can even be used to detect fraudsters during the application process, before they become a ‘customer’.
Many insurance companies already use data analytics to recognise fraud patterns and pick out potential fraudsters in real time, using both internal and external data sources. However, most companies realise that getting the right quality of data from disparate sources (external, historical claims, new claims, underwriting etc.) can be difficult and that the “human touch” in assessing potential fraudulent claims is still essential.
Technology is nothing without people. Technology flags up suspicious activities, but people’s intuition drives investigations too. That is why it is critical that companies train and develop skilled and knowledgeable professionals who have the right experience to indicate when things don’t add up and to deal with fraudulent claims.
Conclusion
Technology enables faster and more cost-effective fraud detection but it can only take us so far. As with so many things, it requires a blend of technology, people, skills and experience to drive successful outcomes – remembering that the fraudsters are always innovating too.
References
[2] One scam every minute – ABI reveals the true extent of insurance fraud in the UK. https://www.abi.org.uk/news/news-articles/2018/08/one-scam-every-minute/
[3] Premiums ‘more likely’ to edge up despite claims fraud crackdown: Fitch Ratings. https://www.postonline.co.uk/claims/4118886/premiums-more-likely-to-edge-up-despite-claims-fraud-crackdown-fitch-ratings