By: Luke Jones, Published on February 23, 2018 10:46 AM, Last Update on February 23, 2018 07:47 AM
The insurance industry is getting excited about digital technology, from online proof of insurance, touchless claims, and digital payment system. However, while the opportunities for insurers are many, technology will also present opportunities for fraud.
In North America, 10-20% of claims expenditure goes to fraudulent payments, and that only accounts for the fraud payments that are detected. Digital claims and touchless transactions are likely to make the situation more of a challenge, according to Dan Gumpright, product manager, Global Insurance Solutions, BAE Systems Applied Intelligence.
With low touch systems, insurers will get a game changing revolution, fraudsters will also see opportunities, as well as customers and insurers.
“A large number of insurers will have 20-30% of their claims at least low-touch, if not touchless, within the next five years. Touchless claims increase risk as payment is made faster than ever and the ‘pay and chase’ method of retrieving funds is ineffective,” Gumpright told Insurance Business.
“It’s therefore vital that fraud is detected at the point of claim, and customer risk is assessed even earlier – at the point of policy inception, or even at the point of quote. This decreases risk and allows insurers to streamline their genuine customers through the touchless claims process with minimal risk and overall reduced operational costs.”
Auto insurance fraud alone costs Ontario-based carriers over $1 billion per year in false claims. Fraud is a significant contributor to premium costs, and is a noticeable problem in a market like Ontario, which is the most expensive auto insurance region in Canada.