In 2019, the Association of British Insurers (ABI) reported that motor insurance fraud remained the most frequent and expensive of all scams.1 Staged ‘cash for crash’ claims are not new and whilst lockdown saw a temporary reduction in traffic, it seems levels are now almost back to normal,2 suggesting that motor and PI claims could increase. Predictions are that global passenger vehicle sales will peak in 2034, and thereafter decline,3 attributed to a number of diverse factors from the rise in ride sharing apps, environmental concerns, and the relatively high cost of vehicle ownership. However, this does not presuppose a fall in motor fraud. New financial pressures resulting from Covid-19 could provoke a rise in contrived claims for leased vehicles whose owners are looking to claim on their GAP insurance and wipe out any remaining debt. Similarly, individuals may be targeted by ‘claims farmers’; middlemen who induce people into pursuing spurious compensation claims which are then sold onto a lawyer.
The nature of insurance fraud isconstantly evolving as criminals devise new and insidious ways to deceive insurance companies and the general public for illegal financial gain. Some behaviours have remained fairly constant over the years, but the industry is now undertaking horizon scanning to predict the fraud trends of the future, particularly in light of developments in technology and the recent Covid-19 pandemic.
Some things don't change
Remote working and employers liability
Claims farming is not limited to motor insurance. With 90% of us expressing a desire to work from home at least once a week in a post-Covid world,4 claims farming firms may seize the opportunity to encourage exaggerated or fraudulent EL claims. Already, some firms are advertising services for third party EL claims where cases of Covid-19 could be linked to a company’s failure to supply personal protective equipment.5 There may also be claims related to repetitive strain injuries or bad backs as a result of employees maintaining their employer has not provided suitable equipment to aid remote working. Insurers and brokers will want to keep a close eye on this area for any indication of a spike in suspicious claims.
Account take-over (ATO)
With our lives increasingly moving online, especially in the wake of Covid-19, our personal data is at an all-time high risk of being misappropriated for nefarious purposes. ATO is one such example; this involves criminals gaining unauthorised access to a user’s account with the intention of dishonestly using their data. In the insurance industry, this can take the form of using policy information to modify coverage or to re-route a claims payment to themselves.
In a similar vein is application fraud, where fraudsters create fake accounts using someone else’s information. Once the fake account is active, the fraud actor typically opens an insurance policy for fictitious beneficiaries or falsifies application information to reduce the premium. During the pandemic, some fraudsters labelled themselves as NHS staff or key workers in order to benefit from concessions offered by insurers.
Illegal insurance intermediaries
As with ‘crash for cash’ claims, illegal insurance intermediaries are a familiar fraud. However, the pandemic has seen a rise in this type of activity, driven in part by fraud actors exploiting changes in individuals’ financial circumstances. These illegal intermediaries are sensible to the sophisticated detection methods employed by fraud teams andclaims investigators and so continue to adapt their techniques in perpetrating this crime. One tactic is to change not only an identity but also the device used, device profile, MAC address and operating system, for example. It’s likely that this type of fraud will persist and continue to evolve.
Account take-over (ATO)
Fraud investigation used to be a manual, time-consuming process but is increasingly being assisted by technology. Fraud analytics, powered by machine learning can use multiple techniques such as text mining, and anomaly detection to unearth likely fraudulent behaviours. Artificial intelligence (AI) tools are especially useful as they can adapt to new circumstances and evolving fraud techniques, helping to stay one step ahead of the criminals. However, the driving force behind machine learning and AI is data, which needs to be both plentiful and accurate.
Technology is also aiding industry collaboration. In 2019, the Insurance Fraud Intelligence Hub (IFiHub) was launched, which allows members to view real-time data in a GDPR-compliant database and compare with their own intelligence to unearth the criminals.
In motor and fleet lines, it’s hoped that advancements in vehicle (such as telematics data or dashcam footage) will provide more information for supporting honest motor claims and identifying fraud.
Summary
Brokers play a key role in the fight against fraud as they are often the first point of contact in the claims notification process. Insurers and brokers will need to continue to work together, utilising all the knowledge, data and tools at their disposal to outmanoeuvre fraudsters whilst continuing to provide a fair claims service for honest customers.
Author:
1 ABI. Detected Insurance Frauds in 2018. 28.09.2019
2 Fleet News. Traffic levels returning to pre-coronavirus levels. July 2020.
3 Global Data. Thematic Research: Electric Vehicles. 2 August 2018. p6
4 Eskenzi Survey. May 2020
5 Kennedys. Covid-19 claims farming, risk level: high. 2020
