AAccording to a recent FRISS survey of insurers in 52 countries, almost 20 percent of insurance claims contain an element of fraud. This is a high number. Insurance is based on honesty, and most policyholders are honest; those who don’t raise premiums. Fraud cannot be accepted as a cost of doing business – as Celent analyst Marty Ellingsworth says: “Fighting fraud is not a strategic competitive advantage. It’s the right thing to do. “And with Covid-19 impacting the industry, automated risk analysis is a strategic necessity for a secure digital transformation.
Covid-19 Insurance Trends
Covid-19 has left us with the worst economic crisis in living memory, and the effects will be long lasting. As government support wanes, the anticipated rise in unemployment and economic uncertainty will put more pressure on households and businesses. This will lead to an increase in insurance fraud. Fortunately, most insurers realize that good data and real-time analytics can help solve the problem.
The survey shows that Covid-19 has an impact on insurance companies in three main ways:
- Increased workloads
- Fewer inspections thanks to telecommuting
- An increase in suspected or proven fraud
While fewer claims have been filed since the pandemic, insurers are also reporting more fraud. The schemes are similar, but people commit fraud earlier due to anticipated financial problems.
The need for real-time fraud checks
Covid-19 has also forced organizations to focus more on digitization and reducing costs. A more digital process without fraud checks can expose insurers.
A recent example is a tattoo parlor that reported a break-in, with a lot of money stolen. The amount was far more than the store’s normal turnover, which real-time detection can report.
These proactive, event and data-based alerts should be part of your digital process – they can help streamline workload, lower the cost of claims, and prevent payment of fraudulent claims. Applied consistently, they will help you speed up the processing of genuine complaints while freeing up your time to investigate suspicious activity.
Leverage the potential to build trust
We all hope the impact of the coronavirus wears off soon – however, the economic fallout will last a long time. In a survey by the Association of Certified Fraud Examiners, 92 percent of respondents expected fraud to increase in the next 12 months. As insurers drive digital change, it’s important that they don’t forget to include fraud prevention in their digital toolbox. We’re seeing insurers move towards real-time risk and fraud monitoring, and proactively monitor policies and claims throughout the lifecycle to ensure they can manage a healthy portfolio.
We work closely with our clients to keep risk and fraud management systems relevant and up to date – and we are proud to note that last year our clients were able to save over $ 1 billion. So let’s not wait for what the Covid brings us, but let’s proactively start to fight against fraud. Your honest customers deserve it.
For more information, visit friss.com or contact us at [email protected]
This article was originally produced and published by Business Reporter. See the original article on business-reporter.co.uk