In the insurance value chain, applying applications in the right use cases and at the right time is essential to competitive positioning and digital success. CIOs nowadays are forced to think strategically about how emerging technologies can be applied for their success.
Fraud Analytics is one of the emerging technologies that Gartner identifies to impact the P&C insurance industry. Although the technology, according to Gartner, has high value, most insurers are still immature when it comes to fraud awareness. Nowadays, between 5% and 20% of P&C insurers adopted a solution for fraud analytics. Gartner predicts the technology to be mainstream in two to five years, also beyond the NA and European regions -where most installations can now be found.
The transformation to a more digital approach has its impact both for the underwriting fraud as the claims fraud. Many insurers are looking for ways to improve their claims operations, especially around loss reduction. Online buying, hacking and self-service platforms bring in new risks that need to be tackled. The ever advancing real-time fraud solutions can be fully integrated in the underwriting and claims processes and are optimized to help solving the insurance fraud challenges.
Raise awareness, embrace technology
If the organization raises fraud awareness and embraces the technology, working with a fraud analytics solution will improve the loss ratio, reduce claim handling costs and reduce false positives, which leads to less time spent in investigating potentially fraudulent claims. Besides this, customer satisfaction will improve, as premiums can be optimized and faster service delivered.
As a best practice, Gartner advises CIOs to, amongst others, look for solutions that:
- Deliver effective scorings, based on structured and unstructured data.
- Contain prebuilt data models that are specific to the lines of business in which they are applied.
- Leverage the options of 3rd party data to deliver supplemental insights
- Can be applied in both claims and underwriting to get the best results.
Transformation is essential and required to withstand new market challenges, such as disruption from new market entrants, consumer changes and shrinking profit margins in many regions. The time for P&C insurers is now to innovate and develop their organizations’ capabilities to support emerging business demands.
The full Gartner Hype Cycle for P&C Insurance, 2017 can be found here.