By Steve Crystal, Head of claims fraud – international, Cert CILA APCIP
The UK and US insurance markets are well established when it comes to the challenge of tackling claims fraud, but what about the rest of the world?
Well, there’s a growing appetite among insurers – those with an international presence, as well as those who only operate in their local markets – to mitigate the threat of fraud. Primary goals tend to be similar: to protect reputation, and to help retain their genuine customers. And over the last couple of years, we’ve seen a third goal emerge in part driven by organised criminals extending their activities beyond their traditional territories. This goal — to have the ability to conduct cross-border investigations, across all product lines — shouldn’t be approached lightly, as regulations, systems and geopolitical concerns can all have an impact on plans and outcomes.
Different experiences, similar stance
In my experience, countries are at different stages of their claims fraud journey — some are in their infancy, while others are more advanced. But notwithstanding differing legislation, regulation, compliance, culture, market approach and policy wordings, we share a common denominator — our risk attitude toward claims fraud. No matter our location or language, it’s seen as bad news.
For example, I’ve noted parts of the Asia market are at the outset of their journey — an area where there’s unrivalled enthusiasm and a passion for a partnership to tackling the issue. We’re actively working with clients in Hong Kong, where we’ve introduced resource and strategy, to help insurers strengthen their approach.
At the more advanced stage of the journey is, say, the South Africa market, where there’s been a longer-standing recognition of the issues at play — resulting in a hankering for fraud detection and containment. In fact, the market’s representative body, the Insurance Crime Bureau, previously reported that South Africa has a markedly high claims fraud incidence, estimating that up to 30% of claims contain some element of concern. That staggering estimate is the highest I’ve seen anywhere in the world, and certainly a reason to major on tackling risk.
Against this backdrop, however, we know the majority of claims are valid, and part of what matters to genuine policyholders is that suspect claims are quickly identified and tackled – a good platform and mandate to accept the challenge of defeating would-be insurance fraudsters. Best practices can stop opportunist and organised claims fraud in Asia, Africa and around the world.
Think global, act local
We’ve adopted a ‘think global, act local’ mentality for helping colleagues and clients tackle the challenge of claims fraud. It’s vital to recognise there isn’t a one-size-fits-all approach. Key stepping stones are to win hearts and minds, strengthen processes for claim screening and, above all else, work in partnership. There’ll always be different languages, time zones, opinions and cultures to consider, but embracing them is a key driver for solutions and opportunities.
A trend we’ll continue to watch across the global landscape is the growing focus on data residency and privacy regulation. Fraud doesn’t sit neatly within borders, so we must find ways to share our findings and data with each other and take advantage of the benefits of cross-border collaboration while maintaining appropriate levels of local protection and compliance.
The application of technology
Technology in the world of claims fraud has been gaining momentum lately. In fact, this is probably the topic I was asked about most when engaging with colleagues and clients in 2022. Whilst technology enhances fraud detection, it’s not the silver bullet, and won’t ever be the complete solution. Interpretation of what the tech is telling us is paramount – making human intervention fundamental. As noteworthy as the technology is, it can’t be a substitute for a trained claims handler, so we must first ensure colleague process, skills and a measure of empathy are in place. Leading with our caring counts philosophy, there’s a need for human engagement throughout the claims process to improve our chances of detecting fraud and to appropriately connect with individuals through an investigation.
Claims fraud doesn’t always lend itself easily to statistical analysis because the rules of the game aren’t fixed. Perpetrators think differently — often randomly — and motives/methods change. Technology can be used to help us flag patterns, cross-references and anomalies in claims, but a level of personal interpretation helps us get to the heart of what the tech is telling us and ensures the correct customer journey is supported.
Looking ahead
Fraudsters who deliberately invent claims will no doubt invest energy to find and exploit weaknesses in fraud defences — including tech. Organizations around the world mustn’t underestimate fraudsters’ determination to beat the system and, in response, should adopt a ‘machine and human’ partnership approach, rather than look upon the challenge as ‘machine versus human’. Digitising the claims process isn’t the primary solution in terms of tackling fraud; it takes two — technology combined with human interaction — to significantly impact fraud rates.
Stay tuned for upcoming blogs from my colleagues, Linda Wisneski, SVP of specialty operations, Americas and Ian Carman, director and head of investigation services, UK.
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