"Claims activity in 2020 continues to vary significantly from all prior years as a result of COVID-19. The steepest decline in claims reported was in April 2020 and began to rebound during May and the following months. ....This article provides an update on our tracked results for 90-day Bodily Injury results through June 2020 and Physical Damage results through August 2020.
The dynamics continue to change during the COVID-19 crisis and are reflected in the differences in severity for physical damage claims and bodily injury claims. Climbing injury costs far outpaced both Collision and Property Damage through June. These changes are unprecedented in frequency and severity, and the long-term impacts will be a topic for discussion well into 2021."
Frank Cesario, Director, Claims LexisNexis
Exploiting pain and misery professional fraudsters will exploit COVID-19 to register personal injury claims and in the UK the long tail of such claims impacts the long term Cesario describes.
Insurers want claims management solutions that settle bona fide claims faster, identify large losses sooner to avoid under-reserving and counter fraud effectively.
In the old days, a great fraud manager was said to have a 'nose' for a fraudulent claim. In modern times, many (wrongly) assume that the nose has given way entirely to technology. The truth lies somewhere between the nose and the tech but fraud is unmysterious. It follows its own patterns so right now there are five important ways insurers can stay ahead.
1) Track the path of least resistance
Like water and electricity, fraudsters like the path of least resistance. Unlike water and electricity, they do their research because they're not keen on getting caught. Criminals share and exploit intelligence about open doors in all systems. In insurance, this ranges from the easiest ways to route around preventative legislation to weaknesses within individual companies' internal controls and resourcing. It’s therefore essential to track fraud incidence on multiple levels from the widest trend arcs, right down to the effectiveness of individual teams and their controls.
2) It's all about the data - but only if you can see it!
80% of the data that could be used to highlight fraud is hidden in unstructured data - pdfs, text files, text in images, receipts, letters. All are documents insurers read one at a time but only a fraction of the useful data in them is converted into structured data. Fraud hides in unstructured data and fraudsters know it. Systems such as 360Retrieve are among those used to allow claims teams to analyse all their data using analytical tools that bring the data to life.
3) Avoid perspective blindness
Matthew Syed's great book 'Rebel Ideas' highlights the problem of brilliant brains with narrow frames of reference. He encourages diversity of thinking, perspective and challenge to avoid blind spots. The LASPO changes nearly a decade ago caused a surge in whiplash claims that caught many insurers unawares at massive cost because their perspectives were wrongly directed. Teams with diverse experience and disciplines combing their ‘nose’ with the data to back it up and see trends early are often the most effective.
4) Watch the trends as hard as the case files
Early sight of - and action on - emerging trends makes a significant difference to fraud and loss ratios. Teams that are too focused on individual case files, may not see the wood for the trees. Data extraction and analysis tools such as 360Retrieve can automatically surface trends at the level of geo-hotspots and even claimant firms.
5) Coronavirus is a portal for fraud
Organised fraudsters don't have morals when it comes to exploiting society's weaknesses. The reduction in co-location of claims and fraud staff, the lack of eyewitnesses during lockdown and the difficulties of loss adjustment with social distancing are effectively an easier pay check for criminals. Expect them to use it - but make sure that your systems are ready today for what is already emerging from H1 2020.
Click here to learn more about 360Retrieve and the counter fraud and personal injury management solutions
Claims activity in 2020 continues to vary significantly from all prior years as a result of COVID-19. The steepest decline in claims reported was in April 2020 and began to rebound during May and the following months.