Fraudsters will always find a way to cheat the system. All lines of business are vulnerable to the crime, including insurance, and organizations worldwide face the sometimes cumbersome task of continuously fortifying their operations to keep the tricksters at bay.
Some countries are more active in their response to insurance fraud than others, according to Dan Gumpright, product manager, Global Insurance Solutions, BAE Systems Applied Intelligence. The issue is “significant” across North America, but the response mechanisms differ between Canada and the US.
“While Canada suffers similarly to the US, there are considerably more central initiatives to combat fraud, such as the data sharing model adopted by CANATICS, an anti-fraud consortium in Ontario, which is pooling data in a single system and detecting organized fraud across multiple insurance companies. The majority of insurance companies in the province have signed up for the service and are actively using it,” Gumpright told Insurance Business.
“British Columbian government-run auto insurer ICBC insures all vehicle owners in the province and has adopted the same technology to combat fraud. A recent PWC report indicated success in early detection of opportunistic fraud, which will lead to prevention over time in the case of ICBC, as consumers become aware of the detection models in place and the risk associated to defrauding their insurer.”
US insurance fraud solutions also differ dramatically to the models working in the UK, Gumpright added. While the concept of P&C insurance remains the same in both countries, the insurance models are significantly different, therefore prompting different types of fraud.
“The UK purchasing model of car and home insurance in recent years has massively increased through aggregators or price comparison websites rather than direct, with fewer policies than ever before being written directly,” Gumpright explained. “In the US, however, much of business is still direct, with a large number of consumers still purchasing through the traditional broker model. While internal policy and claims management systems have advanced in the US, the route in for the customer is very different.”
Some UK insurance lines, such as car insurance, are slightly more simplistic than the comparable offerings in the US, where coverage understanding is sometimes limited. Add to that significant differences on a state-by-state basis in the US, and the chances for fraudsters to slip through the cracks continue to grow.
“The state of collaboration is another significant difference,” Gumpright added. “The UK’s data sharing model is significantly more advanced than most places in the world. For example, the UK market has the Insurance Fraud Bureau (IFB), Insurance Fraud Register (IFR) and a dedicated insurance police task force, with almost all insurance companies collaborating to detect insurance fraud hitting the industry at large.
“Collaboration is more complex in the US, often due to how states operate and their various rules. Data sharing capabilities exist but they are significantly less advanced than that of the UK at this point in time. Indeed, some states in the US don’t even count insurance fraud as a specific criminal offence yet.”