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Fraud Prevention

Insurance Fraud 2020: Impact of Covid-19

Frauds are nothing new for any industry that we talk about, however, the industrial sector that is most known for commonly suffering this type of crime is insurance, where unfortunately the insured also pay the consequences due to the increase in your cousins.

The impact of Covid-19 in the insurance sector, made it possible to establish new measures to continue operations, in addition to taking into account the detection of fraud during this contingency, establishment of a culture to fight fraud, the use of of RRSS to combat it, among others.

It should be taken into account that the rapid changes in the way in which insurers operate and fight against fraud had already begun before the Covid-19 pandemic occurred. Digitization and Artificial Intelligence are mechanisms that provide great potential to benefit insurance companies, despite this, scammers work to perpetrate a crime.

Key findings from the fraud study

It is known that Covid-19 forced 65% of insurers to focus on digitization, almost half of them focused on reducing costs and 30% increased their fraud controls. Working on fraud prevention is important, in addition to enabling a digital way of working, which is more prone to perpetrations.

However, the desire to move towards digital processes has not yet been fulfilled with the action. Many insurance companies surveyed still rely on their staff’s intuition and manual methods to prevent and predict fraud.

18% of claims have a fraud component

Pinning down an exact number of how much fraud has affected the insurance industry is difficult. However, it is pointed out that fraud represents approximately 10% of the cost of all claims, but respondents found that on average they believe that 18% of claims contain a fraudulent element, misrepresentation and inflation.

The most committed fraud during the Covid-19 pandemic were simulated accidents and car thefts, billing of ghost services or procedures, and bogus accidents that “happened” in people’s homes. Eliminating fraud has an unspoken payoff to the loss ratio and is the main reason respondents are willing to take new initiatives to their advantage.

Assessing claims in real time provides better customer service, making critical moments magical. Other benefits include better portfolio quality and investigator efficiency, plus real-time screening of incoming customers offers a better experience and greater loyalty.

As insurers drive digital change, it’s important to remember the importance of including fraud prevention as part of your digital toolkit. Real-time monitoring of risks and policies, fraud and claims throughout the processes, will make a healthy and convenient portfolio possible.