It is an unfortunate fact of life for the insurance sector that every new policy creates a new opportunity for fraud. As providers of expat health insurance, William Russell have discovered that is precisely what happened as a result of the Covid-19 pandemic. “Since the start of the pandemic, we have seen a significant increase in the number of fraudulent claims we see,” confirmed Huang. “We have identified three main types of fraudulent claims, which we have taken to calling phantom claims, double claiming and collusion claims.”

Dealing with ‘phantom claims’

In relation to Covid-19, phantom claims are those in which the client claims to have suffered loss or hardship as a direct result of the pandemic. Although there is no standard way for a phantom Covid-19 claim to be made, one thing they tend to have in common is that they claim the coronavirus pandemic has had a significant effect on their health and wellbeing. Fraudsters may also try to deceptively claim against a life insurance policy for a family member who they claim died of the disease.

Some of these fraudulent claims have been substantial, citing that the coronavirus pandemic has caused significant long-term consequences for the claimant. In some cases, the claims were made by clients who suffered no consequences whatsoever because of the pandemic.

Types of claims may involve:

• Claiming to have contracted the disease, subsequently resulting in loss of earnings, loss of business or permanent or long-term health consequences

• Having developed long-term health consequences from the disease, resulting in further loss of earnings or the need for continued payments to meet the cost of healthcare abroad

• Needing to seek urgent medical care as a result of Covid-19

• Or any other fictitious situation directly related to Covid-19, the global lockdown, and their consequences.

William Russell identified a total of nine phantom claims from four different countries: Colombia, Nigeria, South Africa and Russia. The total value of phantom claims was $62,629.06. The number of claims, and the total value of those claims per country was as follows:

Double claims Covid insurance fraud

Another type of fraudulent claim William Russell identified was double claiming. This is when a client who holds concurrent health insurance policies seeks reimbursement from both insurers for the same admission. In relation to Covid-19, some clients have attempted to take advantage of fast-changing policy wording between different insurers to make multiple claims. The actual claim of having contracted Covid-19 may or may not be true.

William Russell identified 14 such claims, all originating from Indonesia, with a total value exceeding $50,000. They are currently liaising with the other insurers to build a complete picture of the fraudulent claims.

Collusion to falsify Covid claims

The third type of claim related to Covid-19 was one in which the insured party and medical provider collude to falsify a claim. Because the diagnostic criteria for Covid-19 are not yet as mature as those for other diseases, it is easier for medical practitioners to diagnose a case of Covid-19 where it may not actually have existed. This could involve submitting ambiguous clinical evidence, or a physician’s report based on nothing more than the doctor’s observations. There are, of course, cases where this evidence is submitted in good faith, but so too there are instances where this is done to help the client win an insurance payout.

There is also the unique case of ‘Long Covid.’ This is where the effects of Covid-19 linger for a long time, resulting in difficulty breathing, general fatigue and other symptoms that may affect a person’s quality of life. The exact causes of this syndrome are not fully understood yet, and there is no diagnostic test for it. Therefore, medical practitioners may diagnose cases of Long Covid where it may not actually exist.

Either way, this type of fraud arises when a medical practitioner attempts to falsify evidence of a Covid-19 infection on behalf of their client, who can then go on to submit a phantom or double claim. All in all, the total value of fraudulent claims related to Covid-19 identified by William Russell exceeds $100,000 – and there may be many more such claims left to discover.

The challenge of identifying fraudulent Covid claims

“Technology and data are now playing a very important role in the insurance industry when combatting fraud of this sort,” Huang says. “It detects any unusual behaviour throughout the customer journey from quote stage to underwriting, and during the whole claim stage. Additionally, it enables cross-industry anti-fraud collaboration and protects honest customers.”

When it comes to fraud related specifically to Covid-19, William Russell is adopting solutions as part of its digital transformation program to enable the detection of sophisticated and evolving fraudulent claiming behaviours. One of the ways the company is upgrading its fraud detection technology is through the addition of machine learning, which is helping their systems to identify new anomalies as they arise.

Avin Talabani, Head of Digital Transformation at William Russell, explains: “Using data we have gathered from the initial quote for a policy right through to the claims being submitted, we learn from our data and continually tweak our techniques to combat fraudulent claims.”

The majority of insurance fraud is committed at the time the claim is made, according to Mint. Therefore, identifying and stopping fraudulent insurance claims at the earliest opportunity has the best chance of mitigating financial impact down the line.

A survey in India revealed that around a quarter of respondents had identified a rise in insurance fraud as a result of the pandemic, while over half (55 per cent) said they were dedicating more time to fighting fraud. Ninety-two per cent of respondents believed they would rely much more on technology to combat insurance fraud after the pandemic.

Identifying fraudulent claims at the time they are made can help to avoid the substantial costs involved in an investigation. Therefore, William Russell advises other insurers to invest in technology that will help them to identify and fraudulent claims as early as possible.

A global effort to stop insurance fraud

According to the Coalition Against Insurance Fraud, fraudulent claims cost the US insurance sector around $80 billion per year as of 2018. With new types of fraudulent claims emerging all the time, including those taking advantage of Covid-19, this number could further increase.

This will directly affect both insurers and their clients, leading to higher premiums and greater risk.

Huang hopes to see a swift resolution to the ongoing spate of insurance fraud related to Covid-19, and believes that technology will play a key role in helping to mitigate the risk to insurers.

“Health insurance fraud is a significant challenge for the insurance industry,” she says. “That is especially true when fraudsters take advantage of a global pandemic like Covid-19, as it ultimately leads to honest customers paying more for their premiums.”

William Russell remains tight-lipped about the type of technology they are developing to identify and mitigate the risk of fraudulent Covid-19 claims, but watch this space.