At a time of continuing economic hardship, the chance to make some extra money in making fraudulent insurance claims continues to prove an irresistible temptation for too many people. Unlike many ‘white collar’ crimes, prevention is not just about tracking down organised criminal gangs but also identifying the many thousands of opportunistic individuals who look to take unjustifiable advantage in making exaggerated claims on their insurance policies.
The Insurance Fraud Bureau (IFB) reported that, in 2011, insurers exposed 139,000 dishonest claims worth almost £1 billion. The biggest area of abuse was in the motor vehicle industry, where false insurance claims totalled £541 million. The second most vulnerable sector was that of home insurance, in which dishonest claims cost the industry £106 million.
This is however just the tip of a much bigger iceberg. The IFB estimates that a further £2.1bn remains undetected every year, despite substantial investment in anti-fraud technologies and an increased focus on identifying and preventing cross-industry fraud.
It is not, as many perpetrators try to claim, a victimless crime. Deception on this huge scale adds an estimated average £50 to every annual premium – placing a substantial financial burden on everyone taking out an insurance policy, as well as creating massive problems for the industry.
In addressing this challenge, electronic data capture and management can help insurers tackle soaring levels of insurance fraud through enabling greater transparency and control, at the same time establishing more efficient claims management processes.
Speed and efficiency
In the fight against fraud, document capture and electronic data management solutions play a central role in significantly increasing the speed and accuracy of claims handling, as well as providing insurers with greater visibility and more time to identify and investigate questionable claims.
Adopting a capture solution to automate the electronic conversion and classification of claims correspondence as soon as it enters the business will ensure that data can be delivered instantly to the right work stream, which cuts down waiting time and makes the whole process much quicker. Similarly, by automating paper-based processes, this enables employees to store, retrieve and share new claims files and add subsequent updates more effectively.
Currently, dubious claims can take so long to be processed that they are often settled rather than investigated, in order to ensure that the insurer remains compliant with regulatory demands to handle all such claims within a specified period. Automated data management overcomes this problem by ensuring a more efficient way of operating which minimises delays in handling questionable claims.
Effective document management can also significantly reduce the risk of losing critical data or documentation, another contributory factor to potentially false claims being missed.
All this is backed by a full audit trail, providing the insurer with an accurate timeline of compliance quality. As the burden of proof lies with the insurer, this also helps to substantiate that the process was handled properly, should the disputed claim result in litigation.
Customer experience
Not only does electronic document capture and management provide valuable support in the war on fraud, it can also help achieve faster customer response times in driving up customer retention levels.
Making available timely, transparent and accurate information benefits claim handlers by ensuring that they have all the correct and relevant data they need when dealing with any case, whether suspicious or legitimate. This also ensures that the customer experience is faster and more responsive and enables substantiated claims to be paid out faster.
Combating fraud is now on the agenda of every insurance provider. They recognise that failing to increase vigilance because they don’t have the right operational practices in place could have a significant impact on their competitiveness. Document capture and management technologies also offer the opportunity to meet compliance, governance and legislative demands, as well as delivering improved productivity.
Industry-wide intelligence
Today, there is increasing pressure to create an industry-wide response. Phil Bird, director of the Insurance Fraud Bureau, believes that greater collaboration – for example, pooling data intelligence among insurers – could go a long way in helping to combat fraud.
To achieve this, Bird has proposed the establishment of “a consistent industry standard for intelligence sharing,” and has urged insurers to “look beyond fierce competition and show the industry’s appetite to work together in reducing fraud, a problem from which no single insurer is immune.”
A shared facility with large-scale data sets would help more insurers identify such fraudulent activity as quote manipulation or third-party fraud. And, with the cost of settling suspected fraudulent claims inexorably increasing in the UK, there is a growing recognition that doing nothing is no longer an affordable option.
by Mark Kirpalani, managing director, Capital Capture
