In a recent study by FRISS, a global AI-powered fraud detection software for insurers, the impacts of Covid-19 as well as long-term industry trends are highlighted. Rapid and sweeping change in how insurers do business – and fight fraud – were well underway before Covid-19 erupted across the world. The pandemic has accelerated an already dizzying pace of change in the industry; AI and digitising the insurance chain brings remarkable new potential to benefit insurance consumers, yet fraudsters inevitably work to exploit emerging system gaps, continuing to drive up the cost of insurance for honest consumers.
Covid-19 forced 65 per cent of insurers to focus on digitalisation
Key findings from the fraud study include the fact that the global pandemic has forced nearly two-thirds of all insurance organisations to focus more on digitalisation. Almost half had a focus on reducing costs, and about 30 per cent have actively increased their fraud checks. Nevertheless, the recent FRISS study found that the desire to move toward digitalised and straight-through processes is often not yet met with action. Many respondents are still relying on the gut feeling of their staff and other manual methods for preventing and predicting fraud.
18 per cent of all claims contain an element of fraud
Exactly how much fraud impacts the industry is always hard to pinpoint. The industry generally agrees fraud accounts for about 10 per cent of all claims cost. However, the respondents to the survey on average believe 18 per cent of all claims contain an element of fraud, inflation or misrepresentation. The top fraud schemes that saw an increase in popularity during Covid-19 are staged accidents and vehicle thefts, procedure billing or phantom services, and fake accidents occurring at people’s homes.