Spotlight: Fraud – Improving customer trust in quality data

Having already suffered considerable economic stress following the Covid-19 pandemic, the ongoing cost-of-living crisis is squeezing low and middle-income earners like never before. Such financial pressures are likely to lead increasing numbers of adults to engage in behaviour that, at other times, they would never consider, such as providing false information or making false or inflated claims on their policy.

Allied to this likely increase in opportunistic fraud, the insurance industry continues to get to grips with issues of identity theft and organised fraud rings while keeping costs under control in an increasingly competitive environment. This all adds to the pressure on claims teams to adopt technology that will deliver an accurate return on investment without a costly and time-consuming implementation process.

The Insurance Post and LexisNexis Risk Solutions research also identifies what insurers can expect from adopting innovative technology into the claims process, including transforming their ability to defend themselves better from all types of evolving fraud while still being competitive and offering a great customer experience.

One of the biggest challenges that firms face is a lack of trust in the quality and accuracy of their data, which is also extremely telling.

There has been an exponential rise in the ability of technology to harvest all kinds of techniques to improve and streamline fraud investigations. However, suppose the fundamental data at the core of these systems is inaccurate, incorrect, or irrelevant to the models being built. In that case, even the best AI, predictive analysis or orchestration platform will struggle to return the results that insurers need to create a fraud prevention capability fit for the future.

Holistic view of the customer

This is an age-old issue: firms struggle to gain a holistic view of their customers, thanks to various books of business or business lines being housed in disparate systems with limited data hygiene processes in place. Of course, the value of accurate, up-to-date, and relevant customer data is hard to quantify when you don’t have it, which is often what holds firms back from embarking on projects to address these issues in the first place. After all, businesses must commit significant time and resource investment to the task without being able to quantify the expected return.

However, the rewards can be extensive for those firms who do make the leap. Harmonising customer data and adopting solutions to improve the accuracy of their customer insight radically will go far towards setting businesses up for what is likely to be an increasingly competitive world in 2023 and beyond.

We are already working with several forward-thinking insurers on data solutions that promise to unify disparate data sets into one unified single customer view, delivering the kind of accuracy and confidence that extends benefits far beyond fraud prevention. Very often, these projects aren’t as intractable or costly as firms think, and when engaged correctly, they quickly show their value.

Another notable outcome of this research is that many indicated openness to gain access to wider areas of intelligence to help address firms’ often limited view of a prospect or existing customer from a risk perspective.

There are some clear, easy wins for insurers looking for greater accuracy when it comes to fraud screening and addressing blind spots in ID theft, mid-term adjustments, renewals, and claims processing efficiency.

Advanced solutions

Systems that offer a comprehensive view of device risk have been around for some time. Still, the most advanced solutions now go much further, layering device information with email, behavioural biometrics, phone, and geolocation intelligence sourced from a network of organisations able to interact with customers far more frequently than the typical insurer.

This combined picture – easily integrated into existing technology via API – puts insurers in a much better position to understand a customer’s risk profile and therefore make MTAs or renewal risk assessment processes much more accurate, useful, and up to date.

By working together with several underwriters and brokers, fraud and identity screening can be radically improved through an ability to finally incorporate a rich picture of shared intelligence into their screening operations. The results will show significant improvements in addressing ID fraud and reducing false positives. This can lead to businesses exploring the possibility of utilising these types of solutions to improve the experience for trusted customers by reducing delays and their ability to enhance their claims fraud risk assessments.

The most competitive insurers quickly recognise the broad benefits of advanced fraud technology for them across their business. This research demonstrates that assessing value based on issues such as referral volumes and false positives is insufficient. To truly understand this technology’s benefits, firms need to consider the bigger picture: not only the potential improvements in spotting fraud but the positive impact achievable on a range of other essential aspects of customer management and operational efficiency. 

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