The insurance industry has achieved many successes in its fight against fraud but it now needs to address database overload, urges Steve Crystal, head of financial crime at Sedgwick.
Dealing with fraud can be a broad and complex issue, and while it’s vital that insurers and their investigation partners continue to tread carefully, it’s fair to recognise that progress has been made in the fight against fraud in recent years.
Yes, we’re still far from claiming success, and there’s a great deal more work to be done – certainly with the home and commercial products – but I’m enthused by the positive signs and developments that give our industry cause for optimism.
I like a fair bit of what I see from the Insurance Fraud Bureau.
The Insurance Fraud Register is a fantastic development, even if wider access and availability within the insurance sector would be hugely beneficial. A separate debate perhaps, but why not make it available to other groups outside of our industry who can provide relevant information?
I love the IFB’s ‘cheatline’ facility: the majority of customers make genuine claims, and part of what matters to them is that false claims are identified and tackled quickly. The cheatline serves a purpose in this regard, affording genuine customers an opportunity to report something that concerns them. And the IFB appears to have nicely got to grips with analysing and then disseminating what’s received, in turn facilitating collaboration between insurers. The cheatline facility would benefit from more promotion, though, both publicly and within the industry when it comes to sharing the alerts received.
The IFB also released a helpful guide on the General Data Protection Regulation, which has been largely welcomed by our industry. The new rules have prompted a refresh of what can and can’t be done insofar as insurers and their investigation partners are concerned. In particular, the section that references the approach to be taken where there’s reason to collaborate to prevent or detect crime has provided additional clarity. So we should all be clearer on relevance and proportionality now, and on the back of this, we’ve seen more collaboration since GDPR came into force in May.
But the IFB still has a way to go. Understandably it has had motor insurance as its priority for the last few years, but I really want to see meaningful movement into the home and commercial products. And while its affiliate model has appeal, to be really effective there needs to more focus on these products, and there needs to be widespread take-up – oh, and we need to see the benefits outstripping the cost.
The City of London Police’s Insurance Fraud Enforcement Department is another exemplary development worthy of note. It has welcomed consultation and engagement with specialist investigation practices like Sedgwick, and we’ve been delighted to be part of some of the successes it has enjoyed.
Now a few lines about my number one frustration: database overload. We have a plethora of tried and trusted databases, so the foundations are in place, but every day I stumble on inconsistency when it comes to following industry definitions, as well as a lack of using some of the databases properly. Incomplete or inaccurate data can be time-consuming to decipher and work through. We’d all be far more collaborative and productive if we could tackle some of the issues in this area, especially against a backdrop of more identity theft making it easier to falsify applications for insurance.
In summary, collaboration is vital to effectively combating fraud, but at the same time the industry needs to collectively improve the quality of data available. We need to work better together to ensure we manage and share data that will enable us to combat fraud and work more efficiently.
And we really need to grasp this, because of the advent of desktop and armchair fraudsters: fraudsters love digital, and let’s remember they don’t think or act like most of us, they’ll take risks that most wouldn’t contemplate.
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