Callcredit Blog

Learning the lessons of fighting fraud

Fraud & Verification

A few weeks ago I had the pleasure of attending a roundtable hosted by Callcredit Information Group and chaired by Post Magazine. It was fantastic opportunity to get together with a number of respected stakeholders from across the insurance industry to talk about fraud, but on this occasion to look more closely at the issues faced in some of the less mainstream product lines.

Although it is an ongoing battle, the industry has made some positive gains in the fight against fraud across the major classes of general insurance. Advances in technology coupled with insurers making better use of data in order to perform more robust checks throughout the customer journey, have helped to reduce the level of fraud and deter would-be-fraudsters from submitting claims.

While this is positive news of course we know that fraudsters will look for the path of least resistance, so when it becomes harder for them to make claims in the mainstream classes then one consequence may be to look at minor classes such as pet, mobile and travel insurance, which might be viewed as softer targets.

So the question posed was, can some of the measures being taken to counter fraud in motor and household insurance be duplicated across the minor classes too? And the general consensus from around the table was, well, yes and no!

The major challenge is the fact that the smaller claim settlements, and lower average premiums, in these minor classes of insurance means it usually isn’t cost-effective to deploy the same solutions which deliver results in motor and household. As a consequence, focus tends to drift back to those areas where such solutions are deployed as the potential savings appear much greater.. so the problem of fraud in pet, travel and mobile continues to grow with the cost invariably being passed on to the consumer. I noted that the conversation also kept drifting back to fraud in Motor and Household, which reflects the greater focus on these areas and which is entirely understandable. Does this suggest a higher level of acceptance and “pricing in” of fraud in other areas though?

The principle of deploying a more intelligent and co-ordinated data and customer insight strategy across all stages of the customer journey is, however, something which can be replicated in these other areas – it is up to solution providers to identify data and methods which can achieve results here for a lower level of investment, but this isn’t just about the use of third party data. It is also about making better use of the insurers own data. Being able to assess the risk of fraud being committed in one class of insurance as a result of behaviours in other classes is something which can be achieved at organisational level.. but the real opportunity is for this to be achieved at an industry level through removing the reluctance to share data. There are numerous data-sharing initiatives in place across the insurance sector but are these really embraced fully across all classes of insurance in order that consumer and insurer benefit better?

We also touched on the question of consumer attitudes to fraud, and the fact that many feel this is a victimless crime and that insurance companies are fair game. Again, there have been improvements here with TV shows and increased publicity about insurance fraud but there is much more which can be done. The committed fraudster is unlikely to be deterred by such warnings, however opportunistic fraudsters or consumers who just try it on might be.

So, an entertaining discussion and a mixed bag of opinions. There are clear opportunities for the sector to make further improvements in the fight against fraud in all classes, and especially in the areas where we don’t focus so intently – lots done, and lots more to do!

Author: Graham Odiam

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