Moreover, the growing sophistication of professional fraud rings, aided by the internet, is resulting in a higher number of organized scams with higher velocity, greater agility, and greater cross-channel and cross-industry scope. Although some insurers have set up major case departments, many others still base their approach to fraud on catching ‘opportunistic fraud’ (one-off frauds by individual customers), instead of preventing lower frequency but higher cost ‘professional’ frauds.
To reduce fraud in the current environment, insurers need to:
- Identify the nature of current fraud threats
- Update their anti-fraud programs to reflect these threats
- Update their anti-fraud technology systems to support a more sophisticated, enterprise-wide, and dynamic approach to tackling fraud
- To understand the problems that firms are facing and what improvements they see as necessary, Detica NetReveal commissioned Chartis Research to carry out a survey of anti-fraud professionals working in the insurance sector. While the survey and this report focus on US insurers, Chartis Research also conducted a global survey of insurers from 40 countries.
The key findings of the survey show:
- More than half of firms surveyed did not have a well-formulated anti-fraud program
- Almost three-quarters of respondents did not have advanced anti-fraud technology systems in place, while more than a quarter had no automated fraud detection systems in place
- Although detection, automated scoring, and data are major challenges for respondents, reporting and case management are the top anti-fraud technology priorities for insurers.
- The results show that firms have a long way to go to implement more advanced and sophisticated anti-fraud programs and that to implement these programs; they need to overcome non-trivial technological obstacles. This report examines these results and explores how firms can implement more dynamic and cross-channel anti-fraud programs.
The global survey showed that non-US insurers are in a comparable position to US firms; they are more concerned by the challenges the insurance industry faces and more willing to invest in technology systems to improve fraud prevention.