Slamming the front door on insurance fraud

Adrian Coupland, Customer and Marketing Managing Director

Fraud has been one of the most persistent and growing issues for the insurance industry over the last ten years. According to figures released last October by the City of London Police’s Insurance Fraud Enforcement Department (IFED), it has carried out 86 investigations since it was established in 2012, with a total value in excess of £11.5m.

However, this is just the tip of the iceberg, especially now that ghost brokers are operating on social media to give themselves greater credibility.

It’s not just ghost brokers who are making insurance fraud a must-tackle problem though, as consumers are looking to manipulate their application data to achieve the cheapest possible premium. While the broad spectrum of human behaviour means people will make honest mistakes, research by SSP found 55% of consumers felt it was acceptable to change their personal details across multiple applications to find the best price for their policy.

Not only are these individuals manipulating their data, but they are also targeting the criteria that are most difficult for insurers to substantiate, such as their occupation or vehicle usage. They are sophisticated enough to realise there are no shared databases for the validation of vehicle usage, and are taking full advantage of this.

While insurers need to move beyond loading their prices and take action to identify such behaviour, so they can decline the business they really don’t want to write, how can this be achieved when the fraudsters always seem to be one step ahead?

The answer lies in using technology to capture and monitor the behaviour of individual customers in real-time across the whole insurance market to identify when application fraud is occurring. Armed with this information, insurers can write the risks they wish to write at the correct premium and decline the risks that are clearly suspicious – leaving their competitors who lack the necessary intelligence to win this suspect business.

This is exactly the level of insight delivered by SSP Verify, the UK’s only mass market pre-inception counter-fraud solution. SSP Verify uses a multi-channel single customer view, tracking customers across direct, broker and aggregator quotes in real-time, so no option is left exposed. Unless fraud defences cover the whole market, dishonest customers will simply home in on the unguarded channel.

Individuals whom insurers do not wish to quote for, as well as customers whose policies have been cancelled in the past, can be added to watch lists. Insurers often find that when they void policies due to suspected fraud, individuals simply reuse the same details to take out a new policy, but watch lists prevent them returning. Proven ghost brokers, fraud rings and suspect devices can also be included in these lists, so that any activity is flagged up.

At SSP, we have already seen a number of progressive insurers adopt innovative solutions that tackle evolving consumer data manipulation head on in their fight against application fraud. By having such acumen at their fingertips, they will gain a significant, and potentially insurmountable, advantage over firms that wait to adopt such a solution.

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