Article Synopsis :
Tech budgets at insurers are on the rise, but suspected fraud has also increased for the third consecutive time in six years, says The State of Insurance Fraud Technology.
In the five years since 2014, suspected fraud has risen by 11% and the reason why tech budgets are growing. Technology is seen as the primary weapon against fraud as insurers use more sophisticated tools to identify it.
Business rules and red flags are no more than hygiene factors, now, as businesses rely more on predictive modelling, link analysis and exception reporting. Some have also deployed artificial intelligence (AI) to flag up potential areas of concern.
This all sounds expensive, but the proliferation of data from multiple sources has driven down the cost. This has encouraged even smaller insurers to adopt anti-fraud technology when in the past it would have been considered a luxury they could not afford.
It is not without difficulty. Integration with legacy systems presents the same problems experienced elsewhere. The number of false positives is also frustratingly high. And while there is a lot of data available, internal IT resources remain limited, forcing some to seek help from outside organisations.
Other key findings:
- 41% of insurers say tech budgets for 2019 will be larger with predictive modelling and link analysis/social network analysis being the two key objectives for spending money.
- Detection of underwriting fraud is increasingly supported by technology and this will continue as tools become available and insurers learn how to integrate them.
- Referrals received from technology systems remains flat over the past two years. Given the increased used of tech, this is a surprising outcome.
- However, quality of referrals is the measure insurers are focused on.
- Perhaps unsurprisingly, cyberfraud is a major focus as concern from industry, regulators and customers increase.
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Digital Insurer's CommentsThis research identifies a considerable shift in fraud detection in the past few years, with insurers relying on more sophisticated tools to identify risk.
This reliance on technology for the growing problem of insurance fraud has resulted in increased tech budgets, a situation that is unlikely to change in the near future.
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