Morning Briefing: Financial services sector needs to get tougher on fraud

Morning Briefing: Financial services sector needs to get tougher on fraud

Morning Briefing: Financial services sector needs to get tougher on fraud Financial services sector needs to get tougher on fraud
The financial services sector, including the insurance industry, needs to improve its defenses against economic crime as 46 per cent of firms say they have been victims in recent years.

A global report from PwC shows that the number of respondents admitting to being hit by crimes such as fraud has increased from its 2014 poll. Among them,16 per cent had been targeted more than 100 times, 6 per cent more than 1000 times.

The report highlights the costs to insurers and others in the sector with 53 per cent spending more on combating economic crime and more than half expecting to spend more on meeting compliance requirements in the next 24 months.

In cases of fraud, the study reveals that 58 per cent of incidents were committed by external sources but almost a third (29 per cent) were committed by internal sources.

Along with fraud, money laundering, bribery & corruption and cyber are major crimes against the sector. The largest though is asset misappropriation.

PwC says that alongside damage to insurers’ reputations among customers when an incident occurs, is damage to relationships with regulators.

It advises greater use of big data analytics would help identify incidents but also growing risks to financial services firms. Biometrics, stronger IT security and the use of Blockchain technologies could all help curb the rise in economic crime in the sector.
Brokers are the best source for new product concepts
Insurance carriers rank their producers highest when deriving new product concepts.

Most of 32 carriers polled by Eastbridge Consulting named brokers and other external distribution partners as their top source ahead of internal marketing and product teams.

The producer community was named as the best source and brokers also drive much of the new product development through requesting new products.
Global pandemic model adds 6 additional diseases
Six additional diseases have been included in the latest Global Pandemic Model by catastrophe risk modeling firm AIR Worldwide. It now includes nine diseases including viral and bacterial infections that pose a risk of global pandemic which could impact public health and insurers.

“Large-scale infectious disease pandemics can cause millions of deaths and billions―or even trillions―of dollars in economic and insured losses,” said Doug Fullam, Associate of the Society of Actuaries, senior manager of life and health modeling at AIR Worldwide. “The possible frequency and scale of these perils are shifting as global connectivity grows, animal habitats alter, medical advancements continue, the population ages, and the climate changes. It’s important to assess the potential risk to today’s life and health portfolios.”