What on earth am I talking about? Spotting insurance fraud, of course!
An ex-colleague of mine used to aptly describe the traditional rules-based methods of spotting fraud as “if it walks like a duck and talks like a duck, it’s probably a duck.” This is, of course, true to a degree. Your first-time fraudsters will probably make the same mistakes as others and reveal themselves. Others, slightly more advanced, will probably slip up once or twice along the way, and your normal methods of preventing fraud will spot them.
But what happens if your ducks start to bark?
Fraudsters, or ducks as we’re referring to them here, are not your typical petty criminal and do often have more than one brain cell to rub together. So if they know you spot them if they’re waddling along and quacking away, they’re likely to start to bark.
This is especially true of organised “fraud networks.” They intentionally stay off your radar, sliding in under set thresholds, avoiding your fraud rules and ultimately contributing to the 562,000 insurance frauds that occurred last year (made up of 449,000 fraudulent applications and 113,000 fraudulent claims).*
More ducks are barking
No, this isn’t a crisis in the nation’s ponds or an IoT device monitoring duck sounds (see my last blog). This is organised fraudsters getting smart, and in the UK alone, it’s costing the insurance business £1.3 billion each year**. The Association of British Insurers (ABI) recently released stats to say that an insurance scam is detected every minute in the UK.
But that’s just the fraud we know about. What about the ducks that are barking but not being heard? It’s estimated that a similar amount of fraud goes undetected each year, and this is where the big opportunity could be. The insurance industry spent £250 million on fraud protection in 2017, and this could be put to much better use.
How to spot the bark
One example of what the industry is doing to try and spot this previously undetected fraud, or herd the ducks, is the Insurance Fraud Bureau’s (IFB) creation of a new intelligence platform, as part of their 2020 vision and tested with the likes of Esure, Ageas, RSA and Zurich.
(I intentionally digress, but I’m reminded of a “duck herding" team building event I did a while ago.)
This new platform will enable the insurance industry to share details of suspected frauds across all product lines, ranging from opportunistic to organised. Ben Fletcher, Director at the IFB, said this new intelligence platform “will help insurers disrupt fraud more effectively, reducing duplication of effort and challenges with the current landscape, whilst providing a strong platform from which to engage other sectors fighting fraud.”
SAS is proud to be working with the IFB on this initiative and believe our analytical approach to insurance fraud can help the industry find the fraudsters (ducks!), whether they’re quacking, barking or conning your insurance business.