By: Simon Hoskin

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Do you think you're doing enough to tackle fraudulent claims? Even if you believe you are, the industry as a whole remains a target, and collectively, claim providers and insurers need to do more to stem the flow. In recent years, the insurance industry has become a target and witnessed a worrying increase in fraudulent claims, particularly within the realm of travel insurance. This surge has been exacerbated by the emergence of multiple fraud rings and poses a significant challenge to insurers because it threatens the integrity of the industry. For such industry-wide risks, it's imperative that all parties work together to support collaborative efforts and introduce innovative solutions.

Fighting Fraud With Customer Validation

One of the key areas where claim management providers can make a substantial impact is through enhanced customer validation processes. For instance, the majority of motor and property insurance policies currently use soft credit checks to confirm identity, a practice that should be extended to travel insurance products. This step is especially crucial when policies are purchased via aggregator sites, which have become hotspots for fraudulent activities. By implementing rigorous identity verification measures, we can significantly reduce the incidence of fraudulent policies and protect genuine customers. If implementing soft checks isn't viable, we may wish to ask for copies of a form of ID with all claims to ensure authenticity.

Recently, the Accident and Health team at Gallagher Bassett UK observed a troubling trend involving fraud rings exploiting aggregator sites. Fraud rings are buying multiple policies under different names and then submitting a flurry of claims across the industry. Fraudsters are adept at amending documents to suit claim circumstances, making their detection challenging without industry-wide collaboration. This risk highlights the urgent need for combined efforts to identify and close down such schemes.

Detecting Fraudulent Claims Documents

Technological advancements have introduced both opportunities and challenges in this field. While artificial intelligence (AI) has revolutionised many aspects of the insurance industry, it's also enabled fraudsters to easily create convincing fake images and documents. The example invoice below was created in a matter of minutes using a free online AI solution. Such documents can be created and then used for fraudulent reasons with little effort.

Example of AI-generated invoice

To counteract AI-generated documents, the insurance industry must leverage enhanced technology for document validation. At Gallagher Bassett, we've implemented strong validation measures using sophisticated document scanning software to analyse metadata, detect document alterations, and scour the internet for similar fraudulent documents. This validation has prevented multiple fraudulent attempts and supports the protection of underwriters' loss ratios. By adopting such cutting-edge solutions, we can stay one step ahead of fraudsters and ensure the authenticity of claims.

Collaboration Is Essential

Collaboration is key in our fight against fraud. Insurers and third-party administrators (TPAs) must work together closely to share intelligence and develop unified strategies to mitigate the impact of fraudulent claims. A key step towards this direction is the establishment of a database akin to the Claims and Underwriting Exchange (CUE), which has proven effective in other lines of business. Although funding has been a hurdle, the return on investment from such a database would far outweigh the current losses due to fraud leakage. The travel insurance industry should also consider building a dedicated committee for sharing intel on fraud. While various committees exist across our industry, none is solely focused on fraud, presenting an opportunity for targeted collaboration.

Additionally, we must encourage the formation of dedicated fraud handler teams, rather than relying on claims handler-led solutions. Fraudsters are employing increasingly sophisticated tools, and it's crucial that our fraud agents are equipped with advanced resources to counteract these threats.

At Gallagher Bassett, we have a dedicated team focused solely on combatting fraud. Not only does this team help protect underwriters from false or exaggerated claims, it also enables us to complete internal reviews, highlighting trends and sharing information with our clients on how they can reduce the impact on them.

Finally, collaboration with the Insurance Fraud Enforcement Department (IFED) is essential. By sharing intelligence and working together, we can bring fraudsters to justice and reinforce the integrity of our industry.

Tackling the rise in fraudulent claims requires a concerted effort from all parties within the insurance industry. By enhancing customer validation, leveraging technology, fostering collaboration, and empowering dedicated fraud teams, we can combat this challenge and protect the interests of our customers.

If you want to understand more what we're doing at Gallagher Bassett to tackle fraud and how we can support your business, get in touch with our team.

Author


Simon Hoskin

Simon Hoskin

Director of Travel/A&H

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