How can the insurance industry fight back?
2nd March 2016From the 35% of insured motorists who believe it is acceptable to adjust or omit data to obtain a better premium to large-scale organised crime networks, the anonymity of the internet has exposed the insurance industry to a new generation of fraudsters.
By taking advantage of price comparison sites and rapid access to competitive premiums, criminals are working to defraud insurers and consumers out of millions of pounds.
By taking advantage of price comparison sites and rapid access to competitive premiums, criminals are working to defraud insurers and consumers out of millions of pounds.While the industry is working to tackle insurance fraud, it comes at a high cost to the consumer: the ABI estimates that fraud adds approximately £50 to the annual insurance bill of every policy-holder.
Last month, the Insurance Fraud Taskforce released its final report following a year-long review into insurance fraud. Amongst other things, the report recommended that insurers must aim to improve consumer trust in the insurance sector and encourage greater use of data sharing and collaboration between the insurance sector and regulatory bodies.
With examples of sophisticated schemes such as organised fraud networks and ghost brokers on the rise, how can the industry win the fight against fraud?
Integrated dataEffective anti-fraud technologies do exist and can minimise risks to both insurers and consumers during the quotation process.
Enrichment solutions can help price comparison sites maintain both speed and transparency during the quotation process. By cross-checking submitted information against a massive database of finance houses, government agencies and other sources, insurers and retailers can use enrichment services to better assess consumer risk.
A key factor in minimising cost to the industry is deploying technology that works at both point-of-quote and point-of-sale, whether to identify inaccurate information or suspicious devices with a history of fraud. It also allows insurers access to assess an applicant's propensity to claim or default on payments and react accordingly.
When combined with real-time pricing, which enables insurers to instantly adjust the policy pricing to reflect the applicant's history and financial profile, enrichment can dramatically reduce risk and improve quality of business.
Next-gen technologyThe future of anti-fraud data intelligence may have already arrived. Next generation search tools are able to search millions of data records and return results almost instantly, offering retailers greater insight and enabling them to make the most informed decisions.
Using artificial intelligence and machine learning, these solutions are able to analyse trends and behaviours within data to create new business rules and opportunities for the insurance retailer.
Anti-fraud armouryWhile the fight against fraud is far from over, the industry is proactively seeking ways to improve access to fraud databases and other anti-fraud technologies. Greater collaboration between government and industry is leading to wider awareness of the impact of fraudulent claims on the average consumer.
As fraud-busting technology becomes more advanced, insurers are gaining control over the quality of business acquired. Fraudulent activity is becoming easier to detect than ever, and it won't be long before fraudsters are finding themselves on the back foot.