Insurance premiums are set to climb throughout 2012 as insurers seek to claw back the staggering costs of today’s compensation culture without losing the confidence of their core customer base. In the UK alone, fraudulent claims are estimated to cost the insurance industry £2bn annually, adding approximately £44 to each policy holders’ annual bill. This and poor customer focus, too often caused by disconnected data held in siloes, is enough for anyone to switch providers. Therefore, across the EU insurers are facing enormous pressure to retain the ‘good’ customers, reduce operational overheads and instigate smarter technologies that identify and reduce risk.
Since 2008 claims farming has rocketed with a minority of consumers running financially damaging scams against even the largest insurance providers. According to the Association of British Insurers, 1200 whiplash claims are made per day and this accounts for the biggest source of fraudulent pay-outs, rising premiums and dwindling consumer confidence in the motor industry.
The Insurance Claims Management: Europe report, produced by the independent publisher Clear Path Analysis, evaluates the market from the insurers’ perspective to explore the key obstacles and opportunities for delivering a rigorous claims management process, strengthening data analysis capabilities and improving customer interaction. The report includes advice from leading insurance and consultancy professionals such as Detica NetReveal and FINEOS on the latest technological solutions and smartest data analytics that can be deployed to reduce cost, comply with EU regulation and capitalise on profitability through improved customer care.
Graham Newman, European Product Marketing Manager, FINEOS comments “Where there is additional advice, assistance or investigation required, personal contact with the customer will benefit everybody. Most insurers also want to capture more data to use for analysis but this must be balanced with the fact that capturing data increases the workload and cost. However, insurers aim for better data to improve their price and risk decisions and the personal touch enables them to acquire this significant data.”
One of the latest ways in which insurers are communicating with their policy holders is through social media. Newman highlights that “a good strategy in social media will enable insurers to increase the customer touch points and so add value and build trust within the brand. A number of insurers are already doing this by having a Facebook page and using it as a forum to promote their products and sponsorship and maintain consumer contact.”
Jamie Hutton, Global Head of Insurance Fraud, Detica NetReveal identifies the different types and organisation of data that insurers are increasingly reliant on to curb consumer fraud: “Typically huge quantities of data are held in silos; this could be through acquisition, organic growth or as a result of multiple claims systems over many lines of business. The challenge for insurers is to unlock the information sitting in the data and turn it into actionable intelligence.”
All insurance companies are now seeking innovative and cost-effective methods for cutting fraud whilst remaining compliant with the EU’s regulatory overhaul under Solvency II.
Fraudsters are becoming increasingly sophisticated and persistent at the same time, claims management departments are under enormous pressure to act quickly to provide optimum service to their customers. To do this they need effective solutions to help them to understand the risk associated with a new customer or with a claim. However, such solutions are costly to implement and require a fresh approach to operational efficiency that even the largest insurance providers are grappling with.
Hutton goes on to say, “Insurers have to move from fraud detection to fraud prevention; social network analysis finds hidden connections in the data and allows groups of claims and policies to be effectively risk assessed, enabling insurers to better understand who they are doing business with and protect good customers”.
Whilst there are certainly challenges ahead one must not forget the opportunities; as Carlos Montalvo Rebuelta, Executive Director, (EIOPA), “EIOPA is monitoring on an ongoing basis the situation in the insurance sector and we can confirm that it is coping with the crisis better than the banking sector states in the Insurance Claims Management report.”
