In the US & Canada the annual costs of P&C insurance fraud is estimated to be $34bn per annum!
Source Coalition against Insurance Fraud.
The AIB estimates UK insurance fraud to total £1.3bn ($1.7bn) p.a.
Insurers have invested in data analytics and AI to help automate fraud detection but that is a case of shutting the stable door after the fraudulent horse has bolted.
30% to 40% of claims prove to be exaggerated or fraudulent and insurers can stop paying out on these using 360Globalnet's digital claims platform -Siteview.
Customers manage their claims online from their phone, tablet and/or PC (97% take-up) and insurers from their workstations view the complete incident and claim from FNOL to settlement via a single digital record.
360Siteview lets claims handlers send a link allowing customers to register a claim via their phone or tablet using a customised template for each peril to keep info relevant and actionable. The agent then sends a further link, by SMS and email, so the claimant can add photo and video images and, if necessary, additional text to explain the event.
The claimant's photos help validate the claim and videos give context. Metadata yields valuable insight and as "less than legitimate" claimants see what the agent can analyse a significant proportion realise the game is up and typically 30% or more just walk-away saving the insurer time and money.
Many insurtech vendors and insurers propose automating claims processing for low cost simple claims but why do that when at least 30% of claims are not legitimate? At a typical settlement cost of £500($665) for laptop, TV and smartphone claims that adds up to £1.9m ($2.5m) avoidable cost per 10,000 claims made!
That still leaves the potential for analytics and algorithms to detect the claims that get through the rigour of this process. 360Retrieve lets the insurer access, join and analyse
- unstructured and structured data
- Internal and external data
360Retrieve combats and reduces fraud, in some cases by up to 40%. False positive personal injury cases are reduced, with many more red-flag personal injury claims identified. One client uncovered 27 organised fraud rings inside three months.
Using technology to augment human intelligence is the most effective way to reduce fraud. Self-service online claims are the first step and retrieving complete big data for analytics the next. Combining that with the experience and intuition of claims handlers and fraud investigators will deliver the biggest savings for insurers and let them spend more time on settling bona fide claims
A conservative estimate from the Coalition Against Insurance Fraud pegs the annual cost of fraudulent insurance claims at $80 billion across all lines, with $34 billion of that amount coming in the property/casualty sector. The Coalition further reports that 5 to 10% of claim payments by U.S. and Canadian insurers were from fraudulent submissions.