Roundtable: How is the insurance sector investing in solutions to combat the evolving fraud threat?

The counter-fraud sector has more technology and tools at its disposal than ever before. And, with insurance companies seeing an authentic return on their investment in terms of realised fraud savings and a reduction in leakage, the pace of change and use of new solutions is unlikely to slow down anytime soon.

When asked about detecting fraud and the difficulties faced today, the panel agreed that it is difficult to look into the human element side. Insurers are looking to partner their technology solutions with the human element of fraud, ensuring their staff are trained to use different software – such as voice detection analysis – to underpin fraud across the industry.

“You must have human intervention to prevent [account takeovers as a result of voice fraud] because, without your colleagues to call out suspicious activity and compare it against the policy, it’s complicated to detect whether or not this is fraud,” explained one attendee.

In niche areas of insurance, it can be challenging to get the right balance between technological and in-person fraud detection and therefore needs to become a priority. Not accessing the correct data in the right places can be challenging, so the industry needs to take a multi-faceted approach.

Many organised fraudsters hide information in documentation and orchestrate an intricate claims journey where certain parties are added to policies on a multi-level basis. This can range from the claimant to solicitors to even accident management companies in which the fraudster has been embedded.

One attendee described how the use of document mining tools could help identify this risk.

“You can either use [document mining] for evidence or intelligence gathering, or you can also use it to alert. When we first began using this, one firm came up on the radar and was flagged.

Many organised fraudsters hide information in documentation and orchestrate an intricate claims journey where certain parties are added to policies on a multi-level basis.”

“So, we searched the core system – which found half-a-dozen claims – and then compared it to the document mining search, which found over 30 claims. Although this was small-scale, when looking at the core system, there seemed to be minimal exposure, but when looking at the documentation in greater detail, the result turned out to be on a much greater scale.”

An industry-wide approach

Collaboration was a key aspect flagged throughout the discussion, where interactions with all parties involved were seen as a must to help reduce fraud risk.

“We tend to look internally for information about a particular problem, and that could be ghost broking, for example,” commented one contributor. “It’s a challenging spot because you don’t know who they are. But that interaction with brokers could be compelling. So, lacking that information – whether its access or through lack of interaction – is a real problem.”

There is a huge transactional change where financial crime crosses into insurance fraud. The current economic climate and environmental factors are changing fraudster behaviour.

“A lot of our technology is still looking to the past, not forwards,” another attendee said. “I think we’re in danger of looking back; it’s important to understand that combatting fraud is about how we share the trends, threats, and patterns to redesign them into technological solutions.

“The insurance sector is certainly seeing a huge shift where fraudsters know what technology we have in certain lines of the business; therefore, they’re moving out. We must get ahead of them.”

Technology in a balancing act

Considering the current state of the economy, fraud prevention technology needs to be easily adaptable, and its data needs to inform insurers and brokers of current emerging trends as they happen. It’s essential to keep on top of changes so that the industry can adapt and refine, adjust risk scoring of solutions being used, and detect fraud at the earliest opportunity.

One delegate commented on technology providers needing to change their business models.

“We’ve got to start talking about trends in different areas and stop coming to the table with loads of solutions,” they said. “When you have specific niche areas, they tend to be prime areas for fraud where fraudsters know there isn’t much forward-thinking technology; it is manually, document, and face-to-face driven in terms of claims processing. It’s not digital in the way other products are.

“The sector is not that engaged in certain pockets because there isn’t wider interest for some insurers because motor [is seen]as the biggest issue in which there is more interest in sharing data.”

“There isn’t one solution that solves everything; you’ve got to come back to how you interact with a customer,” interjected another, “

Others agreed with this notion, claiming that there is far too much focus on these technologies in the motor space as opposed to others.

“Someone committing motor fraud is unlikely to slip through,” commented an attendee, “Our company has deliberately focused its counter fraud solutions into the commercial and domestic areas of the business. It has forced us to think about these areas in more detail and try to understand what trends look like, which made it easier to see changes and effects on SMEs now that the Covid support is gone.”

Innocent until proven guilty

Although there has been an increase in fraud overall in the past 12 months, not all investigations will lead to fraud as the majority of customers are genuine. Therefore, fraudsters cannot be treated any differently than other customers making a genuine claim.

Although there has been an increase in fraud overall in the past 12 months, not all investigations will lead to fraud as the majority of customers are genuine. Therefore, fraudsters cannot be treated any differently than other customers making a genuine claim.”

“We need to remember that we’re investigating suspected fraud. So, we need to ensure that both the customer and fraudster don’t feel interrogated by us,” said one delegate.

They continued: “We must combat fraud in a way that doesn’t alert the fraudster and customer into thinking they are being investigated. If we alert them, that’s it; they’re gone. We need to find a balance where technology and manual investigations intertwine to create a standardised process that does not raise suspicion.”

Another speaker commented: “In reality, we don’t want to catch people out and make them feel uncomfortable. It is important to ensure the customer journey is at the forefront of investigations and that we treat each and every customer equally, despite whether or not we are suspecting fraud.

“We must accept the fact that these suspect customers may be making a genuine claim, but their behaviours may suggest otherwise from the outset. It’s a judgement we must make, and that’s why it is important that we have the right people asking the right questions.”

Personalisation is key

Defining your customers and fraudsters first is key to building the right technology solutions. Most customers are impatient when claiming, with many becoming irritable and wanting it settled immediately. When asked how consumers behave during their customer journeys, the consensus in the room revealed that it depends entirely on the value and type of claim.

On the other hand, many customers understand that the validation process could be lengthier and more detailed. The key aspect that will impact customer reactions is the skills and ability of the claim handler.

“The handler must manage customer expectations, making sure they don’t have pressure, informing the customer of the process and when they can expect to have their claim settled. We need to ensure that the claims process is as effortless and streamlined as possible for the consumer, and that’s where technologies such as AI, document mining and varied solutions come into play,” remarked one attendee.

“At the end of the day, powerful customer ethos and policy should be at the heart of insurance fraud strategy,” commented another. “Ultimately, you’ve always got more customers and claims coming forward, so it is vital that the speed of your decision-making is supported by technology, better models, and skilled staff, and deal with each individual fraud differently as no two are ever the same.”

A need for real consequences

It is pivotal to ensure fraud technology is efficient and sophisticated. Fraud is still personal, and it is important to investigate why it is being committed and look deeper into what aspects could lead consumers to be more likely to make fraudulent claims.

Yet, with all the technology out there helping combat fraud, the attendees questioned whether the industry is doing enough to deter fraudsters from committing these crimes. Police involvement is just as significant as customer journeys to ensure the industry weeds out the fraudsters from the genuine customers with technology and collaboration.

“We’re looking for prosecutions with Insurance Fraud Enforcement Department or local law enforcement, but fraudsters have no real deterrent not to come back and try again,” commented one delegate, “You can identify ghost broking rings and claim management companies, but then they will reinvent themselves. So, how do we get these people not to come back and knock on the door?

“There should be real penalties for these fraudsters, and this could be the difference between those that try again and those that don’t bother because the risk is too high.”

Technology in terms of fraud has varied, moving backwards and forwards throughout the years. It is important to ensure that the right technology is being used in the right places.”

Technology in terms of fraud has varied, moving backwards and forwards throughout the years. It is important to ensure that the right technology is being used in the right places.

“It’s about recycling the right technology in insurance because what may have been appropriate 12-18 months ago might not be as effective today or in the future. Having those flexible solutions that are relevant to the various touch points within the insurance claims cycle can be really hard to get right,” explained an attendee.

In these turbulent economic times, insurance fraud is often seen as an easy target for temporary financial gain. Helping to educate the populace is essential in disrupting this behaviour, even if it is just once.

“You may have the perfect customer with the perfect financial background who has never made a claim before – yet they at one point decide to make a fraudulent claim because of some financial stress they are facing,” continued one attendee. “It is difficult to identify these anomalies with AI and mining technology because this was, until now, a genuine customer.

“That’s where upskilling staff comes into play to help identify these vulnerable customers. We need to ensure we are making the temptation of fraud as unappealing as possible to vulnerable customers so that we can focus on organised crime rather than the anomalies.”

“The frauds that we see are more behaviour-driven than technology-driven,” concluded another.

 

Sponsored