The digitization of the insurance world is here to stay. Humans are disappearing from many processes and with them the personal check on potential misuses. Fraudsters are eager to use the ‘anonymous space’ this creates. It no longer concerns a secretly altered receipt of an opportunistic fraudster. Committing fraud in the digital era is easier, it does not take much notice of national borders and is therefore very attractive for organized crime.
This development requires an entirely different approach: fraud prevention by teams of experts that employ all the options this digitization offers (legally). As a result, an essentially different role – or mindset – for fraud investigators and coordinators is needed. Those who commit fraud digitally need to be recognized and dealt with digitally.
Rarely an isolated case
Investigating specific fraud cases – at the request of the claims department – will for the time being continue to form the majority of our work. But how unique are these cases? Does the work end after a case is closed? As far as I am concerned, it does not. Maybe that specific case is a good reason for data analysis of similar cases. If one fraudster uses a specific method, no doubt others will do the same. For example, if after the death of an insured one family has continued the benefits abroad, then it is fairly simple to check the situation of other elderly insured persons in similar countries. Questions like this need to be asked and systematically examined.
Analysis based on specific indicators is effective as well. Take for example the time between taking out insurance and making the first claim. Or the number of cases of vehicle damage around midnight when there are likely to be few witnesses and the use alcohol might be involved. Many cases are predictable. The information is available, so make sure you use it!
Stronger together against fraud
Tracking down and preventing organized fraud requires collaboration. For example, this type of fraudsters often targets more than one insurance company. Thus, the public interest in fraud prevention goes beyond the interests of individual organizations. It is therefore in everyone’s interest that these barriers are brought down.
This may also lead to the ‘translation’ of investigated fraud scenarios into insurance policies and claim forms. This makes the loopholes in the rules smaller and reduces temptation.
Digitization: a concern and a blessing
Insurers invest a lot in automation, which has the great advantage that fewer, expensive, people are needed in order to take out insurance and the prices can remain competitive. The main disadvantage is the lack of human check; the ‘anonymous space’ fraudsters put to their advantage.
If identification is not needed in order to take out insurance, how do you know who you are really dealing with? The consequence might be that a dormant limited company takes out income protection insurance, providing the required minimum of data: the number of employees and the total sum of the salaries. Then, within no time, claims that these employees are sick come in one after the other. By the time the insurer gets suspicious, the limited company has gone bust and substantial amounts of money have vanished. A type of organized crime that is on the rise.
Private persons abuse the absence of identification as well. There are numerous examples in which a person has taken out insurances with different companies under dozens of fake names in order to put in the very same fraudulent travel claim.
This type of offence needs to be combated with similar means, making maximum use of all digital options that are available. I would like to challenge insurers to explore the boundaries of the law (on privacy). Where those boundaries lie, differs for each country. In my opinion there is still plenty of leeway: do the messages the insured person posts on social media correspond with the information he or she gives to us? Does the insured have similar insurance policies elsewhere? Are a large number of insurances taken out on the same address, on the same zip code, or – very interesting – on the same IP address? At the moment we do not adequately act upon the latter.
As far as I am concerned, teams of experts could make a start with this. Teams consisting of various specialists with a background in ICT and data-analysis combined with seasoned experts in the field of interviewing and human contact. Investigators that keep their knowledge up to date and can adjust to the changing world of insurance. Experts that jointly set up knowledge bases and continue to keep on track with the ever-growing bulk of international data.
There is a new a new role for fraud investigators/coordinators. They used to be all-rounders with broad knowledge and wide experience. Nowadays they are more and more specialists that work together on team projects. What they have in common is a sense for signals that might be indicators of fraud.
A large-scale search for unusual peaks in data is pretty straightforward, but filtering those peculiarities that are statistically and logically difficult to explain, is harder. This requires context, knowledge of digital manipulation techniques (e.g. in images), common sense and occasionally a confrontation with the suspect.
Aspirations and reality
Every year fraud costs insurers in the Netherlands an estimated 900 million euro, only a small part of this – 30 to 40 million euro – is ever proven. In other countries it will not be very different.
Given these figures, it does not take much for investing in fraud investigation to be worthwhile. Investing in training, in databases, in data-analysis and, in particular, in new experts. Collaboration will become an essential factor. The days of the independent investigator are over. The time has come for experts that work together on fraud investigations, led by experience and common sense. Poirot does not need to retire, but he does need to work in close collaboration with the experts of CSI.