Insurance fraud always goes up when times are tough. It’s a fact.
But unlike the recessions of the early 1980s, or 1990s, this time we have a digital economy, which means that data is useful in tracking customer ID, transaction trails, quote manipulation, varied IP or email address etc. Quote engines have evolved somewhat since the late 1990s, with more sophisticated platforms replacing legacy in-house systems. That means data can be shared and cross-referenced at the point of quote, in seconds, rather than verified using human interaction or paper documents like proof of NCD for example – remember those paper chases?
IE rounded up some expert comments on the ways data can be stacked and layered for deeper insights. When it comes to spotting potential fraud it’s all in the data, all you need are the right keys to unlock it…
Rich Tomlinson, MD at Percayso-Inform offers these thoughts;
“Looking at motor insurance, a lot of the data that has been traditionally available provides a limited picture. However, new dynamic vectors that accurately provide insights around value, usage and specifications are unlocking vital new datasets that insurers can use to identify and prevent fraud.
There are those customers who will, shall I say, “play” with the value and state of their vehicle in order to pay a lower premium and basically defraud their insurer. Our Percayso Vehicle Intelligence platform can access and manipulate datasets into digestible formats to help insurers identify would-be fraudsters at point of quote.
Advert texts, for example are full of useful information but largely go unchecked. Uniquely, our platform offers a decoded, enriched view of the text we’ve collected on any previously-advertised vehicle. Percayso links into the whole motor market from over 8,000 dealerships, car supermarkets, social media and online marketplaces and private sales which provides over 400,000 new data points every 24 hours. This analysis enables us to automatically extract keywords – e.g. has the car been modified, has it got a full service history, have advisories been ignored. We can also extract various insights from previous adverts to offer new insights into the likely risk profile of the policyholder to help insurers make better informed decisions on how to price and whether to quote.”
In a time of inflation or recession, people are tempted to be liberal with their interpretation of their occupation, or where the car is actually parked overnight. Rich notes this issue too;
“Quote manipulation, where a consumer erroneously alters the information they enter into a quote field in order to obtain a lower quote, is an increasing issue for personal lines insurers when you consider the current economic landscape. Having access to full quote data from the whole market to analyse and make decisions on in real time is becoming a crucial aspect of an insurer’s armoury against such fraud and manipulation. As such at Percayso, we’ve invested heavily in building a quote intelligence solution that stretches across all lines to make sure that insurers don’t miss crucial elements that are predictive of fraud, value and risk.”
There is often a psychological process behind some types of raud. In effect, insurance companies can sometimes be seen as fair game, so when the opportunity arises via a claim, to inflate the costs, some people will take it.
Here are some insights from Daniel Derham, Insurance Specialist, SAS UK & Ireland. “The cost of living crisis has given way to a dramatic increase in insurance fraud – a surge of 61 per cent in the last year – according to the City of London Police’s Insurance Fraud Enforcement Department (IFED). Particularly concerning is the rise in opportunistic fraud. Typical examples of opportunistic fraud include individuals exaggerating claims or providing false information during their applications, with cases proving high in motor and property insurance fraud. “All types of insurer are now turning to the latest anti–fraud tech powered by AI and cloud analytics – which systematically searches for questionable claims. This could partly explain the increase in fraud as firms are getting better at detecting it – but if anything, it just sheds light on how high cases of fraud are. Opportunistic fraud is often of low-value – for example, an individual inflating a claim for windshield damage. However, the losses from these types of fraudulent claims can quickly add up. When it is both time consuming and not cost-efficient for agents to investigate, anti–fraud tech can quickly sift through a mass of data, processing and comparing millions of claims in real time to spot anomalies. “This technology is also designed to flag larger attempts of insurance fraud at the hands of organised criminal groups, visualising links among seemingly unrelated entities to uncover relationships or emerging threats. It’s important to remember that while digitalisation and advances in technology have enabled the anti–fraud solutions that so many insurers use today, equally, it has facilitated new types of fraud. The key here is to be quicker and be able to process big sets of data – which predictive modelling and real-time analytics has made possible.”
Meanwhile, Louise Johnson, director, product management, UK & Ireland, LexisNexis Risk Solutions, Insurance notes how tracking email addresses and previous “shopping” trips to other websites can act as indicators to insurers.
“The data insights and technology to spot fraud without detriment to the genuine customer’s quote journey or claims experience have expanded rapidly in recent years.
For example, LexisNexis® Emailage® Rapid uses the customer’s email address and personal information provided during the application to score an insurance application for the risk of fraud. This calls on a network comprising of 5.9 billion digital identifiers, 30 million confirmed fraud events and 82,200 fraud events, on average, shared daily. The technology now also exists to help insurance providers fully leverage their own customer databases to help identify fraud. Our unique identifier, LexID®, and proprietary linking technology resolves, manages and matches information to create one consolidated view of the customer.
In motor insurance specifically, where quote manipulation is a concern, LexisNexis® Quote Intelligence uses shopping behaviour data to help flag if information for a quote is being manipulated to get a cheaper price or for policy ‘fronting’. In addition, we can combine our data about the history and ADAS features on a vehicle or vehicles in a quote with the motor policy history of the individuals in that quote to create a 360-degree view of the risk. This is exciting not just for fraud prevention but also for pricing accuracy.
Finally, insurance providers will soon be able to view all the past claims for an individual across home and motor with the launch of LexisNexis® Precision Claims, a cutting-edge market-wide contributory claims database. This will allow insurance providers to cross-check claims history across motor and home for the first time.”