Insurance claim fraud is a global challenge affecting individuals and businesses alike. In the United States, the Coalition Against Insurance Fraud (CAIF) estimates an alarming annual cost of $308.6 billion attributed to insurance fraud, with Property and Casualty (P&C) accounting for $45 billion of this sum. According to the FBI, the average household incurs an additional $400–$700; per year in increased premiums due to insurance fraud.
Similar challenges confront the UK and Europe. In the UK, the Association of British Insurers (ABI) has identified 72,600 fraudulent insurance claims valued at £1.1 billion. Alarmingly, it is estimated that a similar amount of fraud goes undetected annually. Moreover, the average value of fraudulent claims rose by 20% in 2022 reaching £15,000, compared to £12,283 in 2021.
Insurance fraud manifests in many forms, from staged accidents and fabricated property damage to filing false or exaggerated claims or inflating repair costs. This nefarious activity is driven by organized crime syndicates, manipulation on social media platforms, and individuals seeking swift financial gains.
Understanding the prevalence and methods used for claim fraud is crucial for effective countermeasures. Let us look at some common property insurance claims fraud schemes-
The role of innovative technology and AI in combating fraud is pivotal. Emerging technologies such as Gen AI, analyse complex data and identify potential fraud promptly, leading to transformative efficiency gains and a change in thinking towards proactive defence and unparalleled customer service. Here are some examples:
The impact of Gen AI and other innovative technologies in detecting claim fraud is undeniable. Claim fraud detection solutions powered by AI not only reduce losses but also enhance customer service by expediting legitimate claims processing. This translates to increased profitability for insurers and a smoother, more secure experience for policyholders.
However, the journey does not end here. As AI continues to evolve, its capabilities will refine the fight against fraud. From advanced natural language processing (NLP) for deciphering fraudulent narratives to image recognition for detecting staged accidents, the future holds immense potential for a fraud-resistant insurance landscape. By embracing its analytical prowess, the insurance industry can fortify its defences and pave the way for a future where trust and transparency reign supreme.
With our deep understanding of the insurance life cycle and the use of innovative technologies like AI, we deliver comprehensive solutions tailored to every stage, from claims processing to fraud detection. Coforge’ s Quasar, an exceptional AI Platform engineered to develop enterprise AI capabilities, provides a robust suite of solutions and GenAI accelerators that assist insurers in combatting claim fraud.
For expert consultation, contact us at: insurance@coforge.com
https://insurancefraud.org/fraud-stats/
https://content.naic.org/cipr-topics/insurance-fraud
https://www.fbi.gov/stats-services/publications/insurance-fraud
https://www.covermagazine.co.uk/news/4123505/value-average-insurance-fraud-jumped-2022
Coforge is a global digital services and solutions provider, that leverages emerging technologies and deep domain expertise to deliver real-world business impact for its clients. A focus on very select industries, a detailed understanding of the underlying processes of those industries, and partnerships with leading platforms provide us with a distinct perspective. Coforge leads with its product engineering approach and leverages Cloud, Data, Integration, and Automation technologies to transform client businesses into intelligent, high-growth enterprises. Coforge’s proprietary platforms power critical business processes across its core verticals. The firm has a presence in 21 countries with 26 delivery centers across nine countries.
For more information on Coforge, please visit www.coforge.com
Vikram Singh
Vikram Singh works as AVP – Practice Head, Insurance Pre-sales, Solutions and Business Advisory. He is a Business SME, bringing over 26 years of rich exposure in successfully executing and designing insurance solutions for various clients across the globe. His vast insurance domain expertise along with in-depth experience of variety of insurance products has been instrumental in bringing quality, innovation, and earning client confidence in the project deliveries.
Shishir Priyadarshi
With 14 years of experience in technology, including 9 years specializing in Product Management, Shishir Priyadarshi is a seasoned Insurance SME and InsurTech expert at Coforge. Shishir is passionate about designing innovative solutions for the Insurance and Healthcare sectors, leveraging data-driven insights to deliver impactful results.