TOP
In this era of digitisation, pandemic, and economic stress, insurance fraud is a rapidly evolving problem for the insurance sector. Overall, carriers in the UK and Ireland are performing well in their fight against fraud – but there’s still some room for improvement.
As part of our contribution to optimising claims risk management procedures, we’ve just published our 2023 Fraud Survey – UK & Ireland Life/Health Insurance Market. We want to highlight best practices, pinpoint opportunities for support, and identify potential vulnerabilities.
The survey not only serves as a means to benchmark the market as a whole, but it was designed so that Gen Re can offer individualised feedback and support to our clients.
A large number of clients from the UK and Irish markets participated, comprising group and individual carriers who offer Income Protection, Life/Terminal illness Insurance, Critical Illness, Total Permanent Disability, and Long Term Care. Anonymised responses to a multiple-choice questionnaire were analysed and used to form the basis of the report.
Participants were asked to identify the most common types of insurance fraud they experience. In ranked order, they are as follows:
Most participants felt their exposure to questionable claims has increased due to these primary factors:
Over 40% of participants cited other factors that increased their exposure, specifically:
The survey identified several areas of strength and opportunity among insurers.
Gen Re’s survey confirmed that most clients have adopted many best practices that are widely considered to be effective fraud countermeasures. It’s also significant that one-third of respondents expect to increase their financial investment in fraud prevention within the next year.
But based on our findings, we suggest some specific action items for insurers to consider (if they haven’t already).
Familiarity with trends, schemes, and suspicious indicators is an important line of defense. Therefore, fraud awareness training for staff should be routinely refreshed, not just done when onboarding. Most survey respondents expressed an interest in receiving Gen Re’s support.
A layered approach to fraud detection is ideal. The use of automation to detect suspicious indicators can effectively complement the manual reviews being done by staff. Furthermore, insurers may wish to consider implementing a whistleblower channel to facilitate the reporting of suspect behavior. Finally, considering the prevalence of account takeover schemes and frauds related to false identities, clients should ensure their customer authentication measures are robust and effective.
Claims Assessors should be encouraged to routinely perform validation checks. Furthermore, access to reliable information sources and data analytics is a vital part of any due diligence process and facilitates decision-making. We therefore encourage clients to explore suitable options. The more tools in your toolbox, the better.
Insurers should consider reporting fraud statistics to appropriate industry groups. Sharing data and making use of data already available in the industry helps to identify trends, raises awareness and drives strategy. Furthermore, we encourage insurers to review application questions and policy language to ensure potential gaps have been addressed. For example, asking applicants if they have other Life policies or pending applications is a common best practice. Understanding whether premiums are funded by others is important as well. Some may also wish to consider including anti-fraud warnings in their written communications.
Gen Re is committed to the fight against insurance fraud. If you detect fraud, or have suspicions of fraud, you are encouraged to report it to the appropriate authorities. If you want to join the conversation, please feel free to reach out to us or your Gen Re Account Executive.
