Financial stress is very linked to claim outcome and claim risk, either through fraud or exaggerating claims. The connection is obviously the higher the financial stress, the higher the claim risk."

Katy Scott Insurance Times - 1st July 2020

Insurer and broker claims operations have generally coped well the combination of Covid-19 and work-from-home(WFH) . IT support quickly supported the interconnection vital for continued operations.

Nevertheless, there is an increased danger of fraud slipping through as financially distressed policy holders are tempted to over-egg claims and even make completely fraudulent claims.

Patrick Hayward, consultant at Altus, agreed. He said: “From a risk perspective, there is an increase in the moral hazard presented by customers that are financially stressed.

“Ultimately, there is a greater chance that someone suffering financial difficulties will fabricate or exaggerate a claim where the opportunity arises.

”This is broadly true, to an extent - for lower value claims where there is a suspicion of fraud, there is always a balance to be struck between the value of the claim and the level of effort, and therefore expense, to investigate and challenge the customers.

A practical and cost-effective answer is a well designed FNOL process that allows a policy holder (PH) to make self-service claims i.e. click a 'Make a Claim' button on an insurer's or broker's website that automatically opens up a simple digital FNOL.

  1. Describe the event/loss briefly in words
  2. Now uploads photos of the incident
  3. Now join up the dots with a video.

Even in normal times, 35% of home and contents claimants voluntarily withdraw claims as they see their story fall apart. 35%! even with low value claims that adds up to an enormous sum that most insurers would automatically pay out on even if they employ AI fraud systems.

360Siteview- the digital platform for claims and risk management delivers this benefit and pays for itself from just that one outcome. 

That's not enough however as Richard Tomlinson, managing director at insurance specific data enrichment company Percayso Inform, says in this article.

"The answer lies in “data enrichment from many different sources”.

For example, Tomlinson’s firm Percayso Inform derives its data enrichment product from sources such as public bureaus, as well as collating vehicle, household and geographical information centred around the policyholder.

This type of data enrichment is designed to provide a 360-degree view of the policyholder and helps determine what influences their behaviour, for example their propensity to claim or their likelihood of retention."

360Globalnet's Fraud solution generally offers a 20:1 return on every pound invested. It uniquely finds all the scraps of unstructured data scattered in data silos, he tsunami of correspondence. medical reports, invoices, emails, legal packs, specialists treatment reports- the list goes on and on.

IT joins this with the semi-structured and structured data to give this 360 degree picture of claimants, claims, past history and internal/external data.

Many analytics tools boast of the ability to surface and leverage  unstructured data. They omit, however, that without keys to join these disparate and scattered data scraps, they cannot achieve that.

360Retrieve tackles that and offers another differentiating advantage. 

There is a wealth of knowledge within the insurer's organisation. The fraud team that uses instinct as much as fact to sense fraud. The personal injury (PI) team that instinctively knows that what seems like a simple injury is going to have serious financial costs. You must have come across this type of case.

Cyclist forced off road as HGV cuts corner and falls breaking wrist. Seems clear cut.

But the cyclist is a surgeon and likely to be out of works for a long time. That was hidden in the claims form. Why can't you apply a rules-based engine hat searches across all the data, flags the PI team or complex claims team so that can avoid "under-reserving".  

Joining the insights from all data sources, internal and external with the professional knowledge and intuition of professionals is a winning combination and will help insurers and brokers adress the issues in this Insurance Times article.