Insurance Edge caught up with Dennis Toomey, Global Director for Counter Fraud Analytics at BAE Systems, to get the lowdown on the Global Insurance Fraud Summit, which took place virtually over 4 days recently.
IE; Four days is an in-depth event, tell us more please.
DT: It’s the second year that BAE Systems has hosted this Summit and although it was a virtual event, the growth compared to 2019 was incredible. Last year there were delegates from around 15 countries but this year over 150 delegates attended from 28 countries and we had 40 speakers. It is great to be a part of something that BAE sees as being necessary on many levels and it’s the only global event of its kind.
BAE is holding a global summit like this because as an industry we need a co-ordinated global response to attempted insurance fraud, a forum where experts can share knowledge on the latest trends and anyone working in insurance can gain extra insights. Companies can get up to speed on the latest fraudster tactics, cyber and ransomware threats, plus agree on best practice, a definition of what insurance fraud is and much more.
IE: What are the latest trends after Covid-9?
DT: The four days covered many trends from around the world including regulation, and gave us unique insights into the particular threats faced by different countries and the ways these are being tackled.
One of the panels looked at international vehicle crime. With thefts in the US and around the world spiking upward, the panellists and experts explained how this type of crime is often committed by organised criminals. They use stolen vehicles to carry out a range of activities, including human and drug trafficking, terrorism, illegal import and export of luxury vehicles, staged accidents and chop shops.
One outstanding statistic is that vehicle theft in Colorado has risen by 125% during the pandemic – there could be various reasons behind this.
Are people losing their jobs and then arranging to have their car stolen, so they can claim on the insurance? Are they working from home and no longer in need of a car and can’t sell it? Or are organised gangs targeting cars that are being left on driveways and not used so much? There are always lessons to be learned by studying the trends and underlying data in detail to understand and assess industry trends.
The extra value of an event like the Global Insurance Fraud Summit is comparing data that underpins regional or countrywide trends. For example, perhaps South Africa seeing more car-jackings involving a particular type of vehicle this year. We need to analyse that problem as an industry, share knowledge from previous incidents, look at which car models are being targeted etc.
The different regulatory drivers or frameworks from one country to another, cultural differences, income levels, car ownership per capita and so on – all these factors need to be considered. Only a global approach produces the extra granular-level insights needed to truly have an impact on the global fight against insurance fraud.
During the 2007-2008 recession we saw a significant rise in insurance fraud, and experts at the Summit are bracing themselves for the fact 2021 will almost certainly produce another global spike that surpasses the numbers seen post 2008.
Sadly there are lots of jobs yet to be lost, and when people suffer financial setbacks that have a great impact on their lives, some will turn to fraud to help ease the pain and maintain the standard of living they had before the economic hardship.
The difference between the 2008-10 recession and now is that as an industry we have far more data to analyse, and a much more connected insurance industry looking at that data – so if someone is thinking this is an answer to a temporary problem, they should think again. Fraud is a crime and there is a much greater likelihood of getting caught now more than ever in the history of our industry.
IE; Apart from things like fake crash-for-cash, vehicle theft etc. what other risks are emerging that insurers need to be aware of?
DT: Another area we looked at in-depth at the Global Summit is healthcare, which of course has changed a great deal after the pandemic.
In Maryland USA we have seen the number of virtual online healthcare visits – telemedicine – rise from about 719 per month before the pandemic, to more than 48,000 per month now. That is a massive sudden upswing in demand. There are lots of things to consider around virtual healthcare and doctor diagnosis, prognosis and treatment sessions.
For example, are the healthcare workers at a clinic or hospital or working from home? If so, how secure is their home WiFi and devices as regards hacking or phishing? Then there’s the possibility that other people may walk through the room as a patient is discussing their medical history, or authorising payment for medications. The delegates all agreed that regulators need to look at how healthcare consultations have changed and develop new standards on privacy, data management between multiple devices and practitioners to consumers too.
Don’t forget that the patient’s data security and online connection is a potential weak link here, and any weakness in passwords, or other actors having access to consultations etc. could expose not only their private data, but the clinic/hospital’s too.
IE: Were there any stand out facts or nuggets of info that emerged from the Summit?
DT: Absolutely, there were lots, but one in particular worth sharing is that one panellist told how Google Trends – a marketing research tool used to gauge consumer search behavior in real-time – showed a 125% increase in search queries for the phrase “how to set a fire” in March, 2020. This was at the height of nationwide forced business closures and social distancing mandates, an indication of what is yet to come. .
IE: Wow, and you wonder how they think that search history will remain a secret when the claim is investigated. What else can we expect from this Global Summit in the future?
DT: One of the key benefits is the formation of our diverse Industry Steering Committee to help examine particular problems, and bring all the key players – regulators, law enforcement, insurers, brokers or IT specialists – together to explore them and seek solutions.
Another interesting discussion focused on the fact that several countries released many low-level non-violent offenders during the early phases of the pandemic. It’s important to share this knowledge and analyse the data for any spikes in fraud, fake claims, car or jewellery thefts etc. in certain areas afterwards.
It also emerged that insurers have increased the head count of teams investigating complex or suspected fraudulent claims. Everyone knows we are at the start of a cycle here – there will be more attempts at making fraudulent claims, but the data trail is increasing every year. That means that some individuals, depending on the statute of limitations, may face a civil or criminal action years down the line, even when they think they have won the game.
Looking to the future, the most encouraging thing as we move forwards is that there is much more willingness now, industry-wide, to share data for a common cause. By building databases and connecting systems in a way that didn’t happen in the past, insurers can protect themselves, and the honest consumers, from the fraudsters.