The UK insurance industry is investing more than £200m a year in assessing and combating fraud
A 2016 report from the UK Government Insurance Fraud Taskforce reveals that insurance cyber fraud costs the UK more than £3bn annually. Fraudulent claims for personal injury – such as whiplash following a traffic accident – are especially widespread, made easier for would-be fraudsters by law firms operating on a ‘no-win-no-fee’ basis.
There is a widespread perception that insurance fraud is a ‘victimless crime’. But in practice the losses from fraud are inevitably passed on to the consumer, typically costing each policy holder around £50 per year. To this extent, we are all victims.
In a move to address the problem, the UK insurance industry is investing more than £200m a year in assessing and combating fraud, working with the Insurance Fraud Enforcement Department (IFED) and the Insurance Fraud Bureau (IFB). Key to this initiative is a reappraisal of the way in which insurers approach fraud and, in particular, how data is processed and leveraged.
To effectively harness large volumes of data, insurers are turning to advanced analytical techniques. The growth in smart mobile devices and cloud computing, as well as massive increases in computing power, enable the storage of open-ended amounts of both structured and unstructured information, or ‘big data’. The challenge for insurers is to find customised ways of exploiting such data and translating it into actionable insights. Those who succeed will enjoy a significant advantage over their competitors in tackling fraud.
Make informed decisions based on real-time information…
Drawing on numerous sources – such as personal profiling, credit scores, historical customer data, etc – insurers are now able to collaborate, assemble and compare information to assess risk and help identify fraud before it happens. This occurs mainly behind the scenes, away from the customer.
Breakthroughs in artificial intelligence (AI) – including machine learning, natural language analysis, the Internet of Things, smart home monitors and telematics boxes – mean that insurers are now able to gather and analyse large volumes of data to make informed decisions based on real-time information. Within the next four to five years, it is predicted that social media and other online open sources will also be used to complement existing data. The move is from a reactive to a preventative fraud prevention model.
How GIROUX can help
The explosion in information technology means that businesses have never had more data at their disposal – data which, if used intelligently, has the capacity to yield a wealth of profitable information. But without the means to interrogate this information, the secrets buried in its depths are destined to remain that way. The rise of big data means that we are entering the era of machine learning. By making information more accessible, easier and less expensive to use, GIROUX is committed to addressing this challenge. Using Giroux Analytical Intelligence Services (AIS), our data scientists are dedicated to delivering the answers you seek to mitigate risks and increase underwriting profit.
How can GIROUX help prevent cyber fraud in your organisation?
To find out more or to discuss your needs in detail, contact us +44 20 3287 7620