It’s generally accepted that the insurance industry is braced for a rise in fraud attempts, and with financial pressures arising from the pandemic and lockdown we can expect new types of fraudulent activity.
New trends in insurance fraud have arisen over the past couple of years. In relation to home working companies have been on a learning journey in terms of security and monitoring, making sure staff at home have the right equipment and training to carry on with their responsibilities to customers. In a seminar for Modern Insurance the law firm Carpenters Group recently warned about solicitors and accident management companies actively touting for people who have not had the right equipment that comes with home working, and asking whether they would like to make a claim.
Claims management companies have also been touting for claims on the back of slippages in supermarkets, and pubs and restaurants. According to Carpenters, the biggest rise in fraudulent activity this year has been related to third parties, in addition to grossly exaggerated claims. Although with fewer claims by volume, the average value of claims has been increasing generally*, with far more multiple injury cases and phantom passenger motor claims, and an increase in the number of very young children making claims that require investigation.
Another thing that tends to happen with economic turbulence, or whenever gross domestic product goes down, is that car theft, staged accidents and fire claims go up. This is true, whether we’re talking about any aspect of the whole fraud continuum, from opportunistic, to organised or premeditative fraud.
The dire financial straits for many people and businesses following the COVID crisis will tend to drive more opportunistic fraud, where claims are padded and losses are exaggerated by people attempting to keep their head above water. Other effects from the pandemic and lockdown include: insurance providers being challenged in terms of the number of field assessors and loss adjustors available for property claims, home burglaries are down and home accidents (from people dropping things for example) are up.
As the UK emerges out of lockdown, insurance providers will not only need to consider the change in mind-set that the experiences of the past may have created amongst their personal lines and business customers, they also need to prepare for changes to pricing practices. These factors are heightening the demand for reliable and accurate data at speed, at point of quote, renewal and mid-term adjustment in order to make the most informed pricing decisions.
At LexisNexis Risk Solutions we’ve been stepping up our counter-fraud activities with clients and bringing new fraud data sources into our products. In addition to the work we have done to create LexID® for Insurance to help gain a 360-degree view of a customer (which supports reduced friction with claims processing and fraud referrals, as well as helping manage customer identities across databases), we’ve extended our relationship with Synectics Solutions Ltd (SSL) to bring more fraud data into the heart of insurance workflows.
Working with Synectics and their National SIRA database of insurance and finance fraud helps to bring deeper insight and ultimately better insurance outcomes through the use of syndicated data to solve collective problems.
The SSL SIRA Real Time Quote (RTQ) solution is fully integrated into Lexis Nexis® Informed Quotes and provides sub-second fraud screening at point of quote. This includes matching key data items (such as person, address, vehicle, email address, telephone number or company) to proven fraud data in the National SIRA database giving insurance providers the ability to risk assess and price in a fully automated manner.
Detecting fraud and increasing the quotable ‘footprint’
As we know, from the point of view of an aggregator-led model, people may put false information into a price comparison site because they’re just trying to get indicative quotes or maybe they’re just trying to lower the premium any way they can. Verifying these individuals is critical, from the point of view of reducing fraud, as well as widening the basic ‘footprint’ an insurance provider can confidently quote against.
By serving more and more information to clients, populating more of the application or renewal data fields with our LexisNexis proprietary data, we’re able to verify identities at much higher match rates than were previously possible. Thus we can help the market in the fight against fraud.
This is supplemented by working with Synectics, enabling us to serve back real-time data on things like email address, telephone and identity data together with SIRA data. It is a very important piece of the jigsaw for the industry’s counter fraud activities.
Our relationship with them is specifically targeted at making it easier for insurance providers to ingest fraud-related information through our established Informed Quotes platform, directly at point of quote for both new business and renewals.
At LexisNexis Risk Solutions we make it easy and cost effective for the insurance provider to receive fraud data at point of quote. Our clients can then decide their fraud rules for themselves, combining different factors, setting their own rejection rules and endorsements for the business.
Effectively we help bring more fraud information into the fast and sharp end of pricing. LexisNexis® Emailage Rapid looks more at the digital identity and the digital journey associated with email address intelligence, showing how that can be a predictor for fraud. Then on the other hand SIRA data is based on proven fraud from the National SIRA Database delivered at point of quote through SIRA RTQ. It flags when an email address has been specifically identified as being associated with known fraud. So that is an important distinction in the context of organised fraud becoming increasingly sophisticated and cross-border in nature.
If we take just email information alone, we are uniquely able to help insurers recognise when multiple email addresses are coming from a single entity, together with a lot of other email and fraud intelligence. It’s effectively an ongoing arms race against organized fraud. We know from our conversations in the industry that there is an appetite for solutions that are more comprehensive, but also easy to implement in terms of technology and cost.
*ABI analysis, Q1 2021
Follow the link to the LexisNexis Risk Solutions website to find out more about how we support insurance providers.
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