See how insurers must look to balance innovation that benefits honest customers with robust fraud protection systems.
Being an insurance company is challenging enough without unnecessary exposure. Yet many insurers constantly expose themselves to risk by not detecting fraudulent activity early enough: when establishing the identity of policy applicants.
How bad has identity fraud become? According to Cifas, the UK’s leading fraud prevention service, identity fraud in insurance increased by 16-fold in 2017 from 2016.
There’s an intrinsic weakness in many insurers’ fraud detection processes. Most have siloed systems that stop them identifying high-risk customers further upstream. Insurers need to detect fraud at the earliest point possible: when someone applies for a quote and takes out a policy, rather than much later when a claim is made. Spot fraud here, and the likelihood of issuing policies to individuals and organisations whose sole purpose is to make multiple bogus claims and siphon off large sums of money is cut down.
Increased use of digital channels
The increased use of digital channels for both insurance applications and claims has given fraudsters a perfect method to test thresholds without interacting with a human. The insights they garner from trying to game applications and claims are then shared between groups.
Insurance companies are also starting to embrace straight-through processing (STP): the fully-automated initiation and completion of a transaction from start to finish, with minimal, if any, human intervention.
One key aspect of STP is streamlining the claims process, including ‘low touch’ or even ‘touchless’ claims, the intention being that genuine customers experience no unnecessary delays. This is great for high levels of customer satisfaction, better customer retention and lower claims processing costs for the insurer. Yet – as with any new technology advancement – the first to take advantage are fraudsters.
Finding the right balance
Insurers need to balance innovation that benefits honest customers with robust fraud protection systems to swiftly flag scams and verify policies and claims.
To see such high-end protection in action, you need look no further than Hastings Direct. The rapidly-growing general insurance provider is deploying our NetReveal fraud detection solution. The solution exploits Hastings’ extensive data sources to accurately identify and investigate fraudsters to prevent claim and policy fraud, while minimising the impact on genuine customers.
Accurately and quickly sorting genuine customers from bad will safeguard insurance companies, preventing them from providing policies and paying out untold sums of money to fraudsters. Just as importantly, it will also protect insurers’ hard-won reputation making for more loyal, happier customers.
Find out more and explore our Fraud Detection capabilities below.