March 06, 2017
Insurance Fraud Predictions in 2017
Kevin McDonald, Subject Matter Expert in Insurance, Featurespace
Having worked in insurance fraud, intelligence analysis, and operations for over 20 years, Kevin McDonald joined Featurespace as a Subject Matter Expert in 2016. With 2017 well underway, Kevin shares his advice for how insurers, aggregators and brokers can adapt their focus over the year ahead to tackle new fraud and customer management challenges.
A fresh approach to tackling insurance fraud: looking ahead
As 2017 gets well underway, the year ahead is bringing fresh challenges to those of us involved in the Insurance Fraud world. Whether you’re working in an Insurer Fraud team, or for a Broker, Aggregator, Law Firm or Private Investigation company, risk management continues to evolve – as do customer needs.
Faced with these challenges, where can insurance organisations find the greatest opportunities to adapt to the fraud and risk threats on the horizon in 2017?
Adapting to fraud risk: find your flexibility
Having spent over 20 years working in insurance fraud, intelligence analysis and operations, I’ve seen firsthand that the answer lies in finding adaptable ways to manage your processes for minimising fraud and managing the customer experience.
The agility and flexibility of the Insurance Fraud team is key in meeting these challenges and keeping up with the changing methods of opportunistic, organised fraudsters.
So, what can insurance teams do to adapt fraud management methods and run a successful Special Investigations Unit (SIU) in 2017?
Based on my experience working in the insurance sector, I can see four key areas that Insurance Fraud teams can prioritise to improve the efficiency and effectiveness of managing risk:
1. FOCUS on non-traditional fraud areas: take a fresh look at low level misrepresentations and mid-term policy adjustments. Often, criminals make relatively small changes to these areas to escape detection, and these changes accumulate to enable larger fraud attacks that impact the profitability of the business.
2. APPLY lessons learned from the banking sector: in my current role, I’ve seen banking organisations tackle Account Takeover fraud prevention with methods that can be applied to insurance policies. The key is understanding individual ‘good’ customer behaviour in real time, and spotting the significance of subtle changes that indicate a customer may not be genuine (despite appearing to have all the correct information).
3. MAXIMISE the value of telematics: the latest fraud systems enable you to use customer data from across all channels and books of business, rather than having siloed systems for data analysis and decision-making. For example, organisations can make use of smart boxes in customers’ cars to analyse the style of driving and common locations. This can reveal opportunities to boost the efficiency and accuracy of investigations which involve disputed driver or fronting claims.
4. IMPROVE communications with clients and the insurance community: to cope with the volume of fraud being investigated daily, insurance fraud practitioners need to communicate securely and in real time – not only with companies they share a syndicate with, but also with the relevant wider community of Insurers, Brokers and Aggregators. Collaboration between Insurer Fraud teams is generally good, but a secure instant messaging system can undrpin the spirit of the Insurance industry – showing a united front against fraud.
Getting that competitive edge
With all insurers looking to get one step ahead of the competition, gaining the lead and improving the loss ratio – even by one percentage point – offers exciting opportunities. The tips above should give some food for thought.
Next time, I’ll be taking a look at the technology that is helping to transform these processes even further, enabling insurance organisations to get one step ahead with the latest adaptive behavioural analytics and machine learning systems.
Want to discuss your insurance fraud management needs? Get in touch to find out more about how Featurespace can help transform your fraud prevention and customer management systems.