Survey finds fraud is on the rise, insurance industry among most affected
Published: July 6, 2016
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Industry News
LexisNexis has conducted recent study to show that all industries have been the victim of fraud in its various guises, but it is the insurance industry that is among the most affected. In the study, the company looked at 800 fraud mitigation professionals and used their expertise to understand how fraud spreads through industries.
Along with insurance, industries as varied as financial services, retail, health care, and government were the most affected. However, insurance companies face a never ending barrage of fraud, and Ontarians know more about this than most.
Auto insurance fraud is rife within Canada’s most populated province and is thought to cost the insurance industry more than $2 billion per year. Despite various efforts, fraud remains rife, particularly in the Greater Toronto Area, and is a major contributor to Ontario’s highest auto insurance premiums in the country.
Most professionals (68% for insurance and 64% for financial) believe that the industries should share information and methods for combatting fraud cross-industry. Universal fraud descriptors would be very useful in the insurance industry, according to 63% of the mitigation professionals asked.
For the financial services (61%) and retail (52%) industries, identity theft was their biggest concern. Claims fraud was identified as the larger issue for the insurance (60%) and health care (45%) industries. For the communications industry, hacking (61%) was the source of most of its headaches. The government’s major issues mostly involved fraud related to employees (52%).
“A central feature of the report, the LexisNexis Fraud Multiplier, estimates the total amount of loss a merchant incurs, based on the actual dollar value of a fraudulent transaction. This year, every dollar of fraud cost merchants $2.40, up from $2.23 a year ago, according to the Fraud Multiplier tool. Also, the report finds that the volume of fraud has risen sharply in the last year—from a monthly average of 156 to 206 successful fraudulent transactions, and from 177 to 236 prevented fraudulent transactions—while the level of fraud as a percentage of revenues has also inched upward from 1.32 percent to 1.47 percent.”