How Covid-19 Can Drive Safe Digital Insurance Transformation
Almost 20 percent of insurance claims contain an element of fraud, according to our Insurance Fraud Report 2020 of insurers from 52 countries. That’s a high number. Insurance is founded on honesty, and most policyholders are honest; those who aren’t drive up premiums. Fraud cannot be accepted as a cost of doing business – as Celent analyst Marty Ellingsworth says, “Fighting fraud is not a strategic competitive advantage. It’s the right thing to do.” And with Covid-19 impacting the industry, automated risk analysis is a strategic necessity for a safe digital transformation.
Covid-19 insurance trends
Covid-19 has left us with the worst economic crisis in living memory, and the effects will be long-lasting. As government support tapers off, the anticipated increase in unemployment and economic uncertainty will put more pressure on households and businesses. That will give rise to an increase in insurance fraud. Fortunately, most insurers realize quality data and real-time analytics can help solve the problem.
The survey shows Covid impacting insurance companies in three major ways:
- Increased workloads
- Fewer inspections because of remote working
- An increase in suspected or proven fraud
While fewer claims have been made since the pandemic, insurers are also reporting more fraud. The schemes are similar, but people are committing fraud earlier due to anticipated financial problems.
The need for real-time insurance fraud checks
Covid-19 has also forced organizations to focus more on digitalization and reducing costs. A more digital process without fraud checks can leave insurers exposed.
A recent example was a tattoo parlor that reported a break-in, with a lot of cash stolen. The amount represented a lot more than the shop’s normal turnover, which real-time detection can flag.
Such proactive alerts that are based on events and data need to be part of your digital process – they can help streamline the workload, reduce the cost of claims and prevent payout of fraudulent claims. Consistently applied, they’ll help you fast-track genuine claims while freeing up time to investigate suspicious activity.
Leverage the potential to drive trust
We all hope the impact of coronavirus will soon fade – however, the economic fallout will last for a long time. In a survey by the ACFE, 92 per cent of respondents expected an increase in fraud over the next 12 months. As insurers drive digital change, it is important they remember to include fraud prevention as part of their digital toolkit. We see insurers moving towards the real-time monitoring of risks and fraud and proactively monitoring policies and claims throughout the life-cycle, to make sure they can run a healthy portfolio.
Friss is working closely with our customers to keep risk and fraud schemes relevant and up to date – and we’re proud to note that last year our customers were able to save more than $1 billion as a result. So let’s not wait for what Covid-19 brings us, but proactively start fighting fraud. Your honest customers deserve it.