With malicious actors and opportunistic fraudsters becoming more organized and tech-savvy, the insurance industry must raise its tech capabilities to combat vehicle theft and other insurance crimes.
“Not only is insurance crime becoming more organized, but [criminals] are also leveraging technology,” said Terri O’Brien (pictured), CEO of Équité Association, a not-for-profit national organization dedicated to battling insurance crimes.
“It makes sense that we also have to leverage technology in order to combat these insurance crimes.”
Équité Association was established by the property & casualty (P&C) industry to tackle the costly strain of insurance crimes, which carry a price tag of up to $5 billion each year.
The association uses advanced analytics and coordinated investigations with law enforcement, partners, and industry organizations to fight insurance fraud and other crimes. Its vision is to eradicate insurance crime in Canada by 2030.
Vehicle theft has become a national crisis in Canada, according to O’Brien, who has been named an Insurance Business Canada 2022 Elite Woman. The provinces of Ontario and Quebec have seen double-digit increases in auto theft year-over-year since 2020.
Stolen vehicles are given fictitious vehicle identifications numbers and sold to unsuspecting Canadians or exported internationally. These vehicles drive up premiums and fund other organized crime activity in Canada and overseas.
Production delays on new vehicles have also contributed to the rise in thefts and other related insurance crimes, according to O’Brien.
“Supply chain issues that were exacerbated during the pandemic have driven up the lucrative resale market for used vehicles,” she said.
High-end and luxury vehicles such as SUVs and pick-up trucks are among the most stolen, according to Équité’s 2021 data. They are also increasingly difficult to replace due to supply chain delays, driving up the cost of claims.
Équité plans to launch its artificial intelligence (AI) driven fraud detection platform, ÉQ Insights, later this year.
The platform, which will be rolled out to Canada’s P&C industry, will use data across organizations to identify trends and patterns of fraudulent claims.
“While each individual insurer is trying to combat insurance crime within their own walls, when we bring together the power of the consortium, we can see how those organized crime rings are exploiting our industry and Canadians,” O’Brien said.
Beyond financial losses to victims and insurers, there are also real and devastating consequences to insurance crime.
“It erodes Canadians’ public safety, consumes our benefits, and clogs up our medical and judicial systems the CEO told Insurance Business.
“Staged accidents can also result in serious physical injuries for victims.”
“The Canadian insurance industry has always been a safety and soundness industry. They’re there for us when we need them,” O’brien, who has a longstanding career in financial crime and fraud risk management, said.
With more than 25 years’ worth of experience in the financial services sector, O’Brien said she is passionate about moving her career “from profit to purpose.”
“By coming together to build Équité Association and merging analytics and investigations together, we can start to meaningfully reduce these crimes and move us from detection into prevention,” O’Brien said.
Collaboration is critical to detecting and eradicating insurance crime, and, ultimately, protecting Canadians.
“It’s pivotal that we come together to detect these crimes because no one insurer or broker can see beyond their own institution,” O’brien said.
“They can see the crimes within their own financial institution, but they can't see is how the insurance crime is crossing insurers.”
AI and machine learning can help speed up fraud detection and better detect patterns of criminal activity.
“When a bad actor hits one insurer then a second and we detect the pattern, we can block it before it hits the third, fourth and fifth,” O’Brien said.
“Then our machine learning becomes more sophisticated. The artificial intelligence methodologies then kick in to prevent it the next time around. This allows us to protect our good customers and lock the crime out of the industry altogether.
“But collaboration is critical. Without coming together, we can't share that intelligence and detect those patterns.”
How well is the industry doing at reducing insurance crimes? Leave your thoughts in the comments below.