Fishing for fraud without rocking the boat

Kajal Vakas
Senior manager, claims, LexisNexis Risk Solutions, Insurance, UK and Ireland

Treating policyholders with integrity while mitigating fraud and smoothing the customer journey is all possible

Summer might be here but the UK appears to be stuck in a winter of discontent. The cost-of-living challenge is fuelling an uptick in bogus insurance claims, according to the City of London Police’s Insurance Fraud Enforcement Department, while Zurich has detected a 31% spike in fraudulent property-related claims as it foils nearly £200,000 worth of fraud on a daily basis.

In addition, the National Fraud Strategy was launched by the government recently, as it revealed that 5% of every premium is the cost of fraud. With startling statistics like this, it is little wonder that many insurance providers are searching for the perfect balance between rooting out fraud and smoothing the customer journey.

Everyone knows that insurance is provided on the basis of ‘utmost good faith’—a term where both the policyholder and the insurer agree not to withhold information or provide false information that could affect the policy. The Financial Conduct Authority helps maintain the insurance industry’s part of this deal, but providers know, to their cost, that a small percentage of policyholders will test this rule.

Yet, treating every customer as honest from the outset is really the only way to ensure a welcoming customer experience. So how can insurance providers spot the signs of fraud without rocking the boat with genuine customers?

The answer is simple, let data be the judge. More insurance providers are now adopting the judicious use of accurate and reliable data to help ensure that the vast majority of customers who are genuine are treated as so. The use of data intelligence can provide reassurance to insurance providers without adding friction to the customer journey.

A prime example of this is the verification of an individual’s identity through email address information, used at multiple touchpoints from quote to claim. Email is a unique identifier and one of the most commonly used components of an online transaction. By assessing billions of transactions from global payment processors, email fraud risk scoring solutions gauge the risk associated to a customer’s email address, helping to support front-end insurance fraud detection. In the motor market, no claims discount (NCD) databases will also validate and automate what was historically a lengthy process to confirm proof of NCD.

Meanwhile at the opposite end of the insurance lifecycle, the more information gathered on an asset or individual at first notice of loss, the smoother and speedier the claims process.  For example, by using data to verify a person’s claims history across both home and motor through claims databases, insurance providers can not only reach quicker indemnity decisions, but also reduce the risk of fraud. Other data sharing initiatives such as buying behaviour data gathered from across the market can help reveal switching behaviour and play their part in rooting out fraud.

Since last year’s ban on price walking customers are less likely to be able to find cheaper prices away from their current insurance provider, reinforcing the need for insurance providers to deliver a great customer experience.  It was encouraging that the UK Customer Service Index awarded the industry a rating of 80.8 last July, up from 79.0 the previous year.  Prudent use of data which will help mitigate fraud, look after insurance provider’s bottom line and smooth the customer journey can only help in continuing that improvement.

Image source: Canva and LexisNexis Risk Solutions

Claims Media