- Insurance companies are increasingly using data and analytics to improve fraud detection. By analyzing large amounts of data from claims, underwriting, and other sources, insurers can identify patterns and flags of potentially fraudulent activity.
- However, adopting new analytic technologies can be costly, and regulations make sharing some data between insurers and departments difficult. Insurers must weigh these challenges against the losses caused by fraud.
- As analytic capabilities advance, fraud detection is moving from a siloed function to one integrated across the insurance lifecycle, from underwriting to claims. This holistic approach allows insurers to gain a more complete view of fraud risks.
How do lenders perceive alternative credit data?Experian
Increasingly, lenders are assessing opportunities to leverage alternative credit data. How do they feel about it? Are they utilizing it today? What types of alternative credit data do they want to use? In our exclusive Experian survey, we asked lenders these questions and more. Here are the results.
Insuring your future: Cybersecurity and the insurance industryAccenture Insurance
How are insurance companies faring when it comes to protecting their assets and their customers from fraud, malware, cyber attacks and a host of other security breaches? The question is important. Insurance companies hold a vast amount of data
including personally identifiable information, personal health information, credit card and bank account data, and trade secrets (their own and sometimes their clients’). Insurers
have a very distributed model for servicing, increasing the risk across the value chain. Aging legacy systems complicate matters even more.
The Digital Multiplier: Five Steps To Digital Success In The Insurance SectorAccenture Insurance
Insurers are investing less than many of their counterparts in other industries in essential digital technology. They’re also achieving lower financial returns on this spending.
The few insurers that are generating good financial returns from their investments in digital technology have a big advantage over their competitors. They have grown revenue 64 percent more than other insurers that have invested heavily in digital technology and achieved a 48 percent better return on equity.
Transforming Insurance Risk Assessment with Big Data: Choosing the Best PathCapgemini
Insurers are realizing that big data has the potential to create competitive advantage. There is a gold mine of information residing across the large volumes of data available in multiple sources and disparate formats, if only it can be efficiently mined to support key operational decisions and improve the customer experience. Commercial risk assessment is data intensive and ripe for the incorporation of real-time external data. In this paper, we explore the ways commercial insurers can gain accurate and comprehensive risk assessments when underwriting policies by using big data.
Harnessing the data exhaust stream: Changing the way the insurance game is pl...Accenture Insurance
Learn how external insurance data and analytics is changing everything, from pricing risk to interacting with customers. Read more: https://www.accenture.com/us-en/insight-harnessing-external-data-stream
The insurance industry has remained much the same for more than 100 years, but over the past decade it has seen a number of exciting new innovations and new business models.
How do lenders perceive alternative credit data?Experian
Increasingly, lenders are assessing opportunities to leverage alternative credit data. How do they feel about it? Are they utilizing it today? What types of alternative credit data do they want to use? In our exclusive Experian survey, we asked lenders these questions and more. Here are the results.
Insuring your future: Cybersecurity and the insurance industryAccenture Insurance
How are insurance companies faring when it comes to protecting their assets and their customers from fraud, malware, cyber attacks and a host of other security breaches? The question is important. Insurance companies hold a vast amount of data
including personally identifiable information, personal health information, credit card and bank account data, and trade secrets (their own and sometimes their clients’). Insurers
have a very distributed model for servicing, increasing the risk across the value chain. Aging legacy systems complicate matters even more.
The Digital Multiplier: Five Steps To Digital Success In The Insurance SectorAccenture Insurance
Insurers are investing less than many of their counterparts in other industries in essential digital technology. They’re also achieving lower financial returns on this spending.
The few insurers that are generating good financial returns from their investments in digital technology have a big advantage over their competitors. They have grown revenue 64 percent more than other insurers that have invested heavily in digital technology and achieved a 48 percent better return on equity.
Transforming Insurance Risk Assessment with Big Data: Choosing the Best PathCapgemini
Insurers are realizing that big data has the potential to create competitive advantage. There is a gold mine of information residing across the large volumes of data available in multiple sources and disparate formats, if only it can be efficiently mined to support key operational decisions and improve the customer experience. Commercial risk assessment is data intensive and ripe for the incorporation of real-time external data. In this paper, we explore the ways commercial insurers can gain accurate and comprehensive risk assessments when underwriting policies by using big data.
Harnessing the data exhaust stream: Changing the way the insurance game is pl...Accenture Insurance
Learn how external insurance data and analytics is changing everything, from pricing risk to interacting with customers. Read more: https://www.accenture.com/us-en/insight-harnessing-external-data-stream
The insurance industry has remained much the same for more than 100 years, but over the past decade it has seen a number of exciting new innovations and new business models.
The term “alternative data” is tossed about in the industry, but what types of alternative data can truly be used when lenders want to make a credit decision? How can it be leveraged to help you grow your credit portfolio wisely? What insights can you glean to expand your consumer universe?
Uncover some of the latest trends attached to the non-prime universe and learn the latest around alternative credit data. This deck additionally explores how some of the newest attributes can benefit lenders of all sizes.
How Alternative Credit Data Provides Lift in Your PortfolioExperian
What is alternative data and how does it differ from traditional credit data?
How can alternative data be used to maximize your portfolio?
Learn how to leverage this new data set to maximize profits in your business. We’ll cover the latest findings in lender and consumer perspectives on alternative credit data and ways to use alternative credit data across the customer lifecycle giving you a deeper view of the consumer.
Enterprise Fraud Management: How Banks Need to AdaptCapgemini
Fraud prevention is becoming one of the biggest areas of concern for the financial services industry. But first generation Fraud Management systems are falling short. By moving towards more enterprise approach to fraud management, financial institutions can combat the increasingly treacherous fraud and cyber crime landscape while reaping numerous benefits for the organization.
Using Accenture Research methodologies - Economic Value Modelling (EVM) and survey – this thought leadership paper quantifies the digital opportunity for South Africa’s short-term insurance industry to 2020. By leveraging digital technology, Accenture estimates that short-term insurance providers in South Africa can increase their gross written premiums (GWP) by R115.2 billion by 2020.
Top Regulatory Insights for Fintechs & Financial InstitutionsExperian
We're breaking down the top regulatory insights you need to understand to prepare your compliance strategy for 2019 and beyond. Covering the latest information on upcoming regulations, including:
- Impact of CECL and how to prepare
- Priorities for the CFPB and House Financial Services Committee
- Must-know details of the Consumer Privacy Act of 2018
Despite having been one of the first industries to use data processing on a large scale, insurers have acquired a reputation of lagging technologically over the past decades. However, recent innovations around Big Data and analytics allow insurers to reassert themselves as leaders.
To gain greater insight into future changes in the insurance industry, the EIU surveyed over 300 executives at life and property/casualty insurers.
Discussion of strategies for increasing profits without focusing on expense reduction but instead on areas with leverage like claims. Specific examples for gaining an edge are discussed.
Infographic: Symantec Healthcare IT Security Risk Management StudyCheapSSLsecurity
Cybersecurity in Healthcare: While Cyberattacks and data breaches are rising across industries, healthcare is lagging behind in cybersecurity investment.
As the US economic recovery gains momentum, unemployment is falling and consumer confidence is on the rise, creating a more conducive environment for carriers to market their products and services. This year’s Outlook discusses bigger picture issues likely to have a significant effect on consumer behavior and insurer operations in 2015 and beyond.
No More Snake Oil: Why InfoSec Needs Security GuaranteesJeremiah Grossman
Ever notice how everything in InfoSec is sold “as is”? No guarantees, no warrantees, no return policies. For some reason in InfoSec, providing customers with a form of financial coverage for their investment is seen as gimmicky, but the tides and times are changing. This talk discusses use cases on why guarantees are a must have and how guarantees benefit customers as well as InfoSec as a whole.
Fraud detection is a popular application of Machine Learning. But is not that obvious and not that common as it seems. I'll tell how QuantUp implemented it for WARTA insurance company (a subsidiary of Talanx International AG).
The models developed gave between 10% and 30% of reduction of losses. The project was not a simple one because of the complex process of handling claims and using really rich dataset. The tools applied were R (modeling) and DataWalk (data peparation). You will learn what is important in development of such solutions in general, what was difficult in this particular project, and how to overcome possible difficulties in similar projects.
Insurance Industry Trends in 2015: #1 Big Data and AnalyticsEuro IT Group
By implementing customized big data solutions, Euro IT Group can help you unlock the tones of information already flowing through your organization, analyze it, extract value and transform it into insight that drives growth and revenue.
From underwriting to marketing and managing risk, and every business function in between, big data is valuable and integral to your commercial success. Experian’s latest technology innovation levels the playing field and fills the gaps in your data across all facets of your organization
Dear Delegates,
Corporate fraud costs businesses hundreds of millions of dollars each year. It affects livelihoods and is a common
cause of corporate failure. It is the responsibility of the board of directors to prevent fraud by putting in places the
appropriate controls and review procedures. This program shows you why Accounting Information System (AIS)
Threats are ever increasing. Control risks have also increased in the last few years because there are computers
and servers everywhere, and information is available to an unprecedented number of workers. Distributed
computer networks make data available to many users, and these networks are harder to control than centralized
mainframe systems. With the introduction of 3 levels of COSO and value driven ERM, things should be under
control. Recent events at SATYAM proves that in reality things are getting out of control. So, what went wrong ?
Is it time to train the auditors ?
Recognising the challenges that organisations are facing in combating Fraud, CSI In Practice is pleased to present
this 2-days Workshop on Enterprise Fraud Risk Management. This will serve as an excellent opportunity to learn how
best to conduct an internal investigation to protect your organization and step up on controls to deter fraud.
In 2015, the Aon Global Risk Management Survey revealed how increasing competition remained at the top of the industry’s list of concerns, but the potential for damage to brand and reputation is now second, having risen up from seventh place in the previous survey.
Like any responsible supplier, we know that the answer to delivering a good service is to ensure our customers are fully furnished with the facts that may influence their buying decisions. In this report, we consider how these factors translate into the risk profile of UK retail and how they may influence insurers to underwrite them at a good price, or lower, than last time around
The term “alternative data” is tossed about in the industry, but what types of alternative data can truly be used when lenders want to make a credit decision? How can it be leveraged to help you grow your credit portfolio wisely? What insights can you glean to expand your consumer universe?
Uncover some of the latest trends attached to the non-prime universe and learn the latest around alternative credit data. This deck additionally explores how some of the newest attributes can benefit lenders of all sizes.
How Alternative Credit Data Provides Lift in Your PortfolioExperian
What is alternative data and how does it differ from traditional credit data?
How can alternative data be used to maximize your portfolio?
Learn how to leverage this new data set to maximize profits in your business. We’ll cover the latest findings in lender and consumer perspectives on alternative credit data and ways to use alternative credit data across the customer lifecycle giving you a deeper view of the consumer.
Enterprise Fraud Management: How Banks Need to AdaptCapgemini
Fraud prevention is becoming one of the biggest areas of concern for the financial services industry. But first generation Fraud Management systems are falling short. By moving towards more enterprise approach to fraud management, financial institutions can combat the increasingly treacherous fraud and cyber crime landscape while reaping numerous benefits for the organization.
Using Accenture Research methodologies - Economic Value Modelling (EVM) and survey – this thought leadership paper quantifies the digital opportunity for South Africa’s short-term insurance industry to 2020. By leveraging digital technology, Accenture estimates that short-term insurance providers in South Africa can increase their gross written premiums (GWP) by R115.2 billion by 2020.
Top Regulatory Insights for Fintechs & Financial InstitutionsExperian
We're breaking down the top regulatory insights you need to understand to prepare your compliance strategy for 2019 and beyond. Covering the latest information on upcoming regulations, including:
- Impact of CECL and how to prepare
- Priorities for the CFPB and House Financial Services Committee
- Must-know details of the Consumer Privacy Act of 2018
Despite having been one of the first industries to use data processing on a large scale, insurers have acquired a reputation of lagging technologically over the past decades. However, recent innovations around Big Data and analytics allow insurers to reassert themselves as leaders.
To gain greater insight into future changes in the insurance industry, the EIU surveyed over 300 executives at life and property/casualty insurers.
Discussion of strategies for increasing profits without focusing on expense reduction but instead on areas with leverage like claims. Specific examples for gaining an edge are discussed.
Infographic: Symantec Healthcare IT Security Risk Management StudyCheapSSLsecurity
Cybersecurity in Healthcare: While Cyberattacks and data breaches are rising across industries, healthcare is lagging behind in cybersecurity investment.
As the US economic recovery gains momentum, unemployment is falling and consumer confidence is on the rise, creating a more conducive environment for carriers to market their products and services. This year’s Outlook discusses bigger picture issues likely to have a significant effect on consumer behavior and insurer operations in 2015 and beyond.
No More Snake Oil: Why InfoSec Needs Security GuaranteesJeremiah Grossman
Ever notice how everything in InfoSec is sold “as is”? No guarantees, no warrantees, no return policies. For some reason in InfoSec, providing customers with a form of financial coverage for their investment is seen as gimmicky, but the tides and times are changing. This talk discusses use cases on why guarantees are a must have and how guarantees benefit customers as well as InfoSec as a whole.
Fraud detection is a popular application of Machine Learning. But is not that obvious and not that common as it seems. I'll tell how QuantUp implemented it for WARTA insurance company (a subsidiary of Talanx International AG).
The models developed gave between 10% and 30% of reduction of losses. The project was not a simple one because of the complex process of handling claims and using really rich dataset. The tools applied were R (modeling) and DataWalk (data peparation). You will learn what is important in development of such solutions in general, what was difficult in this particular project, and how to overcome possible difficulties in similar projects.
Insurance Industry Trends in 2015: #1 Big Data and AnalyticsEuro IT Group
By implementing customized big data solutions, Euro IT Group can help you unlock the tones of information already flowing through your organization, analyze it, extract value and transform it into insight that drives growth and revenue.
From underwriting to marketing and managing risk, and every business function in between, big data is valuable and integral to your commercial success. Experian’s latest technology innovation levels the playing field and fills the gaps in your data across all facets of your organization
Dear Delegates,
Corporate fraud costs businesses hundreds of millions of dollars each year. It affects livelihoods and is a common
cause of corporate failure. It is the responsibility of the board of directors to prevent fraud by putting in places the
appropriate controls and review procedures. This program shows you why Accounting Information System (AIS)
Threats are ever increasing. Control risks have also increased in the last few years because there are computers
and servers everywhere, and information is available to an unprecedented number of workers. Distributed
computer networks make data available to many users, and these networks are harder to control than centralized
mainframe systems. With the introduction of 3 levels of COSO and value driven ERM, things should be under
control. Recent events at SATYAM proves that in reality things are getting out of control. So, what went wrong ?
Is it time to train the auditors ?
Recognising the challenges that organisations are facing in combating Fraud, CSI In Practice is pleased to present
this 2-days Workshop on Enterprise Fraud Risk Management. This will serve as an excellent opportunity to learn how
best to conduct an internal investigation to protect your organization and step up on controls to deter fraud.
In 2015, the Aon Global Risk Management Survey revealed how increasing competition remained at the top of the industry’s list of concerns, but the potential for damage to brand and reputation is now second, having risen up from seventh place in the previous survey.
Like any responsible supplier, we know that the answer to delivering a good service is to ensure our customers are fully furnished with the facts that may influence their buying decisions. In this report, we consider how these factors translate into the risk profile of UK retail and how they may influence insurers to underwrite them at a good price, or lower, than last time around
Our lives are changing at an unprecedented pace. Transformational shifts in our economic, environmental, geopolitical, societal and technological systems offer unparalleled opportunities, but the interconnections among them also imply enhanced systemic risks. Stakeholders from across business, government and civil society face an evolving imperative in understanding and managing emerging global risks which, by definition, respect no national boundaries.
Twitter for Consumer Businesses: Overview of Twitter Business Uses & TrendsAdam Schoenfeld
An overview of Twitter for B2C businesses I recently presented for a group of venture capitalists. The deck touches on the following points:
1. Why do consumer businesses care about Twitter?
2. How is Twitter being used - high level?
3. How is Twitter being used for customer service and market - specifics
4. Take Aways
5. Trends to watch
For a company like Aon, sectors like food and drink manufacturing are our lifeblood. The industry employs over 400,000 people in the UK, accounts for more than £80bn in annual turnover and we are proud to work with many of the sector’s leading companies in the UK and across the world.
Now joining us for the third year in a row, Ash will provide a further ‘digital dear diary’ update, focusing specifically on his team’s work to influence change to build a truly digital culture across the organisation.
In June 2013, Ash Roots spoke at the Digital Summit just a few months into his role as Director of Digital at Direct Line Group. Brought in to lead a digital transformation at the major insurer, he explained what he’d learned in his early weeks and months… what was working and what wasn’t… how he was trying to build capability and what he saw coming down the road. One year later, Ash reprised his role with an update. How had the last year gone? What progress had been made and what led to that progress? Did things really pan out the way he thought and if not, what got in the way and how did he tackle it?
THE ILLINOIS POISON CENTER is much more than the operators who answer the phone and provide help to those in need. We are a group of health care professionals, specially trained to give advice and on-site poisoning treatment that saves lives. In times of need, doctors, nurses, and pharmacists call on us, along with tens of thousands of people throughout Illinois facing a potential poisoning. But we don’t just treat the problem. Through proper education, we help prevent poisonings from ever happening in the first place.
Insurance today is considered both as a form of security and investment. It gives a sense of assurance to its client- the courage to mitigate unforeseen mayhem in life. But with the influx of fraudulent activities and felony across various industries, the insurance sector stands to be no exception. One of the ways that miscreants try to get money from insurance companies is through Insurance Claims Fraud
Harnessing the data exhaust stream: Changing the way the insurance game is pl...Accenture Insurance
Vast new data streams create opportunities for insurers to identify and act upon hidden insights, but they also open the door for new business models and competitors.
Data-driven insights make it possible to create new products and new revenue streams, typically in partnership with players from outside the industry.
Harnessing external data is a complex undertaking, but insurers can start by developing a comprehensive plan and then undertaking specific, high-return initiatives that build momentum and help transform the enterprise into a winning competitor in the new digital arena.
This presentation provides a brief insight into the need to undertake an analytics project, particularly as it pertains to claims management and fraud. To this end the presentation will touch on the general challenges confronting the property and casualty insurance industry, as well as the challenges and lessons learnt from early adopters of business intelligence. In the face of these challenges analytics holds the potential to generate substantial value as evidenced by several short case study examples. The presentation concludes with a look at the issue of fraud as it pertains to the industry and some of the metrics that are influenced by it.
The presentation draws extensively, and focuses on, the work and viewpoints from industry participants including; Accenture, IBM, Ernst & Young, Strategy Meets Action, Ordnance Survey, Gartner, Insurance Institute of America, American Institute for Chartered Property Casualty Underwriters, International Risk Management Institute and John Standish Consulting. References are included on each slide as well as on the “References” slides at the end of the presentation.
Artificial intelligence (AI) currently being used by insurance companies has failed to remove gender bias from the profession’s claims, underwriting and marketing processes.
A Chartered Insurance Institute (CII) report tells insurers they must tackle these gender biases. The report found that the datasets used to train the algorithms which support AI systems are rooted in outdated gender concepts. Algorithms learn by being trained on historic data but the report notes more and more of that data is now unstructured, coming from text, audio, video and sensors.
Yet the report warns embedded in that historic data are decisions based upon historic biases, particularly around gender. The report concluded insurance firms need to prepare a structured response to this issue, starting with visible leadership on tackling gender bias in AI.
The Work Ahead in Insurance: Vying for Digital SupremacyCognizant
Insurers expect dramatic changes to their work by 2023 as a result of adopting digital technologies and mindsets, according to our study. Speeding processes, harnessing data and forming new collaborations will be key to winning the digital arms race ahead.
The Currency of Trust: Why Banks and Insurers Must Make Customer Data Safer a...Capgemini
Are banks and insurers a safe pair of hands when it comes to customer data? Our global survey of more than 180 senior data privacy and security professionals – as well as 7,600 consumers – found that less than a third (29%) of these organizations offer both strong data privacy practices and a sound security strategy. Just one in five (21%) are highly confident that they can detect a cybersecurity breach.
This picture has so far not unduly affected consumers’ perceptions of the industry. We found that 83% of consumers trust banks and insurers when it comes to data. And while one in four institutions have reported being victim of a hack, just 3% of consumers believe their own bank or insurer has ever been breached. However, with the pending General Data Protection Regulation (GDPR) regulations, this trust factor is likely to change as transparency increases. Financial organizations have to reveal a data breach 72 hours after the incident.
Banks and insurance firms have a clear incentive therefore to fortify their defences. As well as avoiding the prohibitive fines and penalties that will result from compromised data, protecting privacy offers a strategic business advantage. Addressing security concerns will drive greater adoption of low-cost digital channels. We found that security concerns deter nearly half of consumers (47%) from using digital channels. It will also reduce churn and attract competitors’ customers – 74% of consumers would switch their bank or insurer in the event of a data breach.
Preparing to be a trusted data steward is no easy task, however. It means raising the bar on multiple dimensions:
• Aligning data practices with consumers’ expectations
• Finding innovative ways of providing non-intrusive security to consumers
• Building the capabilities required to monitor cyber risks on a real-time basis
• Revisiting the data governance model.
Building your reputation for data privacy and robust security is definitely challenging. But, those who strike the right chord with consumers will enjoy a competitive advantage over their peers. The winners will be those who triumph in the trust game.
All product and company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
Shaping the right strategy, managing thebiggest risk.Until recently, the Internet of Things (IoT) was on the strategic agenda of only the largest and most progressive insurers. The IoT was largely viewed as a futuristic concept, and many insurers adopted a “wait and see” attitude.
Data Breach Insurance - Optometric Protector Plansarahb171
The Optometric Protector Plan offers malpractice, professional liability and business insurance for Optometrists, Ophthalmic Technicians and Students. Here is the 2014 Data Breach Industry Forecast.
Fixing the Insurance Industry: How Big Data can Transform Customer SatisfactionCapgemini
Insurers are facing a moment of truth. Customer satisfaction levels have hit worryingly low levels. According to a survey conducted by Capgemini in 2014, less than a third of customers globally are satisfied with the services of their insurance providers. Traditional insurers also face competition from new entrants who are determined to meet customer expectations. Non-traditional competitors, such as ecommerce majors and technology startups, are leveraging their data-rich customer interactions to create and sell insurance products.
Surprisingly, insurers seem to have overlooked the impact of Big Data on improving customer experience as they often focus their Big Data efforts on detecting fraudulent claims and improving underwriting profitability. In fact, only 12% of insurers consider the enhancement of customer experience as a top Big Data priority. This is startling given the poor levels of customer satisfaction in the insurance industry. In this research, we examine how insurers can effectively leverage customer data to improve customer satisfaction.
The rise of Fintech, changing consumer behavior, and advanced technologies are disrupting equally all the financial services industry, among which also it’s most prominent member, insurance
The insurance industry has been using data to calculate risks for years, still, with new technology now available to collect and analyze large volumes of data for patterns and better risk prediction and calculation, the value of understanding how to store and analyze it has grown exponentially (Liu et al., 2018).
Insurers are at their early stage of discovering the potential of big data, and multiple technology companies are investigate how to make value of such technology (Pisoni, 2020)
3. The Role of Data and Analytics
in Insurance Fraud Detection
Analytics for Insurance Europe
Conference & Networking Event
London, October 6-7, 2014
Hear strategies for embedding
analytics into operations to reduce
costs and improve pricing
www.analytics-for-insurance.com
3
Overview
The rise of analytics presents a world of almost limitless potential for indus-
tries such as insurance where companies have long held a foundation of
information. The industry at large has had a slow adoption of new Big Data
analytics because of cost concerns, and regulation may be the limiting
pressure of the future.
In the past, fraud detection was relegated to claims agents who had to rely
on few facts and a large amount of intuition. New data analysis has intro-
duced tools to make fraud review and detection possible in other areas
such as underwriting, policy renewals, and in periodic checks that fit right
in with modelling.
The role this data plays in today’s market varies by insurer as each weighs
the cost of improving upon information systems versus the losses caused
by current fraud. This often comes down the question of: is fraud creating
a poor enough customer experience that infrastructure investments will
improve fraud detection and improve honest customer claims processes?
Protection of personal information is paramount, but fraud pattern recogni-
tion requires a large amount of data from underwriting, claims, law enforce-
ment and even other insurers. Each new piece of legislation has only made
the protection hurdle higher when integrating these sources.
Once this data is collected and properly utilised, insurers must consider if it
is accurate. Modelling often relies on past behaviours for fraud predictions,
but criminal practices change quickly enough to make some of this analysis
worthless. Assessing data quality has become a struggle.
While analysis has proven a difficult task to master, today’s insurers are
seeing many benefits. Fraud detection has improved and systems are now
robust enough to provide analytics in real-time. Some insurers have gained
the ability to scan for fraud before a policy or claim is approved, pushing Big
Data from a siloed fraud unit all the way to agents in the field.
The future of fraud detection, however, cannot be via a pure analytics
approach. The human element in assessing risk will remain a vital piece of
proper detection. Data can hasten the detection of fraudulent activity and
patterns, but people will always be required to turn reports into actionable
intelligence.
4. The Role of Data and Analytics
in Insurance Fraud Detection
Analytics for Insurance Europe
Conference & Networking Event
London, October 6-7, 2014
Hear strategies for embedding
analytics into operations to reduce
costs and improve pricing
www.analytics-for-insurance.com
4
Setting the Stage of Today’s Market
The illegal activities that encompass fraud are first and foremost a detri-
ment to the financial stability of each insurer, but the harm caused is much
more far-reaching.
These deliberate acts have a long-term impact on all operations of an
insurer. Fraud losses and risks can lead to price increases for loyal customers
as well as introduce additional time and review before insurers pay legit-
imate claims. This increased scrutiny of honest customers is only visible
when they feel most vulnerable and are in the greatest need of the insurer’s
services.
Pressing customers in such a vulnerable position can create significant
harm to reputation and trust, risking increased policy turnover.
Fraud detection units and internal auditors typically manage most of the
data and systems used to store and process fraud detection. As automated
processes become more in-demand, IT has a bigger role to play within the
fraud unit. The availability of real-time services will further the importance
of IT in budgets and decision making.
Regardless of an IT or fraud background, team members must be well-
trained to understand the modern threat. As many units are still growing to
scale, team members are pulling double-duty as both IT experts and fraud
analysts.
The Face of Today’s Fraud
In Europe, fraud is largely gang-related, so the focus is typically on third-
party instead of first-party fraud.
Fraudsters pursue the path of least resistance and this eventually shifts
to areas where there is less fraud detection. Analytics engines that aren’t
applied across an entire organisation may indicate where fraud will shift to,
such as pet care divisions for some insurers.
Ghost-broking is also a growing area of fraud and tends to stick to one type
of insurance product. Analytics engines can help identify some of these
areas and establish patterns to help the market identify concerns before
paying a claim and potentially before a claim is filed or policy issued.
“The success of an individual fraudulent claim depends on the fraudster’s
ability to present that as a genuine, unique occurrence. Obviously frauds
have common traits, and these can be determined through data sharing
and analytics,”said Ben Fletcher, Director of the Insurance Fraud Bureau.
5. The Role of Data and Analytics
in Insurance Fraud Detection
Analytics for Insurance Europe
Conference & Networking Event
London, October 6-7, 2014
Hear strategies for embedding
analytics into operations to reduce
costs and improve pricing
www.analytics-for-insurance.com
5
The What and When of Data Availability
Most insurers have a huge repository of existing data in terms of historic
claims and policy information plus a steady stream of new claims and appli-
cation data. Insurers work with law enforcement to share some information;
however EU law as well as country laws significantly limit what information
can be shared among insurers.
Much of this data is typically used to validate what’s being told by the
claimant and what is being processed. Insurers not only look for red flags in
terms of conflicts but they also look for connections to organised crime.
Insurers today look for fraud in new policies and then review information
when there are policy changes. Touch points that cause a review include
coverage shifts by insurers, new claims, changes by the policy holder, and
during policy renewal.
“Sometimes not all needed data is available and the quality of the exist-
ing data is partly poor. We have to find the right balance in reducing data
volumes and gathering the best data for effective analysis,”said Roland
Woerner, Global Head of Counter Fraud at Zurich Insurance Group.
However, the market is improving. Unstructured data has become an
opportunity instead of a problem. Many insurers have the ability to change
unstructured information into structured data and actively mine this for the
opportunities available therein.
“The challenge with some data is that some brokers are not always willing
to give all of the information that insurers’fraud detection units would like,
such as contact information. Email addresses and phone numbers can be
essential to identifying links to fraudulent activity,”said Steve Jackson, Head
of Financial Crime for Covea Insurance.
6. The Role of Data and Analytics
in Insurance Fraud Detection
Analytics for Insurance Europe
Conference & Networking Event
London, October 6-7, 2014
Hear strategies for embedding
analytics into operations to reduce
costs and improve pricing
www.analytics-for-insurance.com
6
Existing Operations and Obstacles
To a large extent, Big Data analysis is being driven by IT imperatives and not
mainline business operations. Analytics are often introduced on a project
basis and, if benefit is shown, then analytics platforms are expanded to
more divisions.
Insurers may implement these techniques in marketing or other customer
service areas first, but fraud detection units benefit from the tools and
analysis just as much. The main point for the introduction of analytics in a
business sense is determining its present value and building the case for a
consistent return. It becomes a people plus power equation.
“For claims fraud prevention and detection, an insurer needs a highly
professional organisation, and the best people capabilities supported by
excellent data analytics,”said Woerner.
These professionals can help companies make full use of core systems
and external sources such as the common fraud database provided by
Insurance Information Centre. To avoid data concerns,“required fields
should be matched and accuracy of the fields examined step by step,”said
Taşkın Kayıkcıoğlu, AGM, CIO and Member of the Executive Committee at
Groupama.
Fraud Systems from Silos to Ever-Present
In the past, systems were unable to speak together and often were siloed
because integration technology wasn’t available. Today, every insurer will
be slightly different as they move to new services, so some insurers have
legacy problems while many others have robust systems that can pull data
from multiple sources.
Unfortunately, even insurers who have made significant investments are
still operating with some silos because of concerns over improper informa-
tion sharing within departments.
For many customers, the information they provide can only be used by the
department responsible for their policy. This means an auto policy division
cannot access much information collected by a homeowner’s insurance
division. While data sometimes may be collected and processed en masse,
insurers must make sure that results and other information are not passed
along improperly or without consent.
“Many legacy systems lack detail and this is compounded by the fact that
some departments still work in silos. This means that disparate pieces of
useful information about an entity are rarely pooled; but if they could be,
we would create a single accurate impression. Many analytics solutions
7. The Role of Data and Analytics
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Analytics for Insurance Europe
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use mapping layers, which helps fraud departments pull in multiple data
streams, either internally or externally, into a consolidated view. Of course,
this does nothing to ensure that data is no longer siloed by other depart-
ments,”said Jackson.
The Holistic Fiefdom
Claims investigation units typically hold the data for fraud detection, so
they have a necessity for systems integration. Unfortunately, many organ-
isations still have a fiefdom and this precludes a more holistic view of the
complete fraud threat that exists today.
Data-focused insurers are struggling to unify information around the touch-
points of claims and underwriting. This operational convergence is of the
utmost importance.
The conversation still comes back to three main questions that insurers
must answer for their business models:
■■ What are the costs of advancing data analytics to the organisation?
■■ Are fraud losses today creating a significant burden for current or
future operations?
■■ Is fraud creating bad press or making the customer experience poor?
As a whole, insurers believe they have a control on the industry and its
fraud, even with the slow pace of adopting new technologies. Insurers who
adopt a sense of urgency around data diligence are finding it to be a signifi-
cant point of distinction for their customers and their bottom line.
“It comes down to: how little can they spend to give the impression of
excellent customer service and maintain capabilities,”said Richard Collard,
WW Business Development IBM i2 Fraud Analytics.“Insurers too often take a
Band-Aid approach to an infrastructural concern.”
It may take pressure from state regulators for the industry to adopt new
services on a broad level.
Model Citizens and Model Concerns
“I think today we’re looking at a change in behaviour and the propensity to
commit fraud,”said Collard.
Behaviour changes represent a challenge to insurers because behaviour
modelling currently trains and bases predictions on past, identified fraud
practices. Many of these models have not been relevant in recent years
because the prediction data they’re using is simply too old.
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The established belief that models must train for future behaviour based on
past experience took a significant hit during the financial crisis. However, it
has been beneficial for insurers and other industries to see this hole.
“There are always challenges around data quality. It’s a perennial problem,”
said Jackson.
Insurers and their fraud teams are starting to regain ground and learn what
new behaviours look like to respond to fraud. Predictive analytics is playing
a stronger role as is entity analytics, the understanding of who an individual
is and if they are who they claim to be. Analytics engines can now run these
checks and raise concerns during the on-boarding process.
“The single biggest challenge is putting in the appropriate controls and
team to ensure that you find the fraud but that you don’t disrupt the
customer experience in the process,”said Fletcher.
Beyond speed, the safety and security of the information itself is
paramount.
Data Safety and Disclosure
“Everything we do is through a secure connection. I wouldn’t say we’re
paranoid but we’re very conscious about data security. Anything that leaves
us goes through a secure connection,”said Jackson.
A separate fraud department exists in today’s insurer and this unit typically
holds all of the data being used for detection. Data from multiple sources,
such as claims and underwriting, are syndicated and sent to the fraud team
that then does its analysis on-site.
Holding the data in a separate location allows the fraud team to enhance,
modify, and update data safely and securely. This also helps a fraud team
keep data only on internal systems and away from Web-based risks. Insurers
take a significant blow to credibility when any data is lost or stolen.
While the data is being managed by fraud detection, it is up to individual
agents throughout a policy’s lifecycle to ensure that policy holders give their
consent for data to be analysed. This has led to overt disclosure that data will
be monitored for fraud and that any discoveries will be shared with authorities.
“Transparency is important for credibility of anti-fraud activities. It’s one of
our fundamental priorities to keep our honest costumers informed and it’s
part of our fraud prevention approach,”said Woerner.
The industry is hoping to expand this type of sharing to new data as it is
collected. For fraud detection,“image recognition and voice analytics will
9. The Role of Data and Analytics
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be used in near future. For example, one photo can be used for multi-
claims, it should be prevented technically,”said Kayıkcıoğlu.
Overt disclosure has also had a chilling effect on some fraudulent activity.
“Now, there’s a strong chance that they’re not going to commit fraud unless
they’re organised criminals – then they don’t care,”said Jackson.
Does Fraud Detection Get in the Way of Other Business?
Fraud units have three main goals:
■■ Detect fraud and pull potential fraudulent claims for in-depth review.
■■ Return non-fraudulent claims back into the claims cycle so honest
customers are not upset.
■■ Perform the first two operations as seamlessly in the business cycle as
possible.
Many insurers are now capable of performing analysis with Big Data to
quickly flag or validate claims. The automation process focuses on this
speed and, overall, the industry is at a place where it can claim that very
little gets in the way.
“On the whole we don’t face any real problems with interrupting the cycle
on a genuine claim,”said Jackson.“Nothing gets in the way of the claim
when we can help it.”
“Taking an attentive approach to fraud and associated costs means we are
able to protect our honest customers and continue to provide them with
the best possible insurance cover now and in the future,”said Woerner.
New innovation is helping to speed up the fraud processing of data and
other services. Some providers can even process information and provide
an initial analysis while a person is in an office signing up for a policy.
Agents can often get a real-time approval or denial from an initial claims
unit review.
Is Real-Time a Necessity?
When discussing Big Data and analytics in a broad sense, there is typically a
business-case emphasis on real-time functionality. In the insurance world,
real-time processes are the preferred approach for operations, but they are
not a necessity for analysis once potential fraud is determined.
In the application screening process and pre-sales decisions, real-time anal-
ysis is desirable for most policies. Here, insurers are struggling to balance
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speed with thoroughness. The ultimate goal is to avoid the need to look for
fraud after an insurer has made a sale.
However, this is mainly a propensity modelling concern, not a complete
search for fraud. This modelling is used to determine the likelihood of a new
policy holder to commit a fraudulent act, and it can be done in real-time.
Routine checks don’t have any need for lightning-fast speed, reducing
the computing requirement and overall cost of analytics programs. Again,
insurers are likely deploying propensity models as new information is
uncovered or databases are updated.
In claims, insurers again want service to be as close to real-time as possible
to maintain the best level of customer service. Here and in policy origi-
nation, if fraud or a potential for fraud is detected, the need for real-time
decision making is reduced.
Insurers want to take their time when reviewing cases for fraud, so it is okay
if the process becomes longer and more involved after a red flag is discov-
ered.“We’ve found quite a bit of fraud based on this kind of approach,”said
Jackson.
Police Under the Insurance Umbrella
Insurers are taking a more prominent role in community monitoring by
working with police to fund specific units for fraud enforcement.
Last year, the Association of British Insurers announced plans to invest £11.7
million over three years to help fund an expansion of the Insurance Fraud
Enforcement Department within the City of London Police.
Additionally, groups like the IFB help UK insurers to detect fraud rings and
have reduced some informational barriers. Information must flow directly
to the IFB and not to other insurers, which some insurers say dampens the
ability of their in-house teams. However, this type of system-flow could be a
benefit to the industry as a whole.
Current fraud police units also have limited data-sharing back to the
insurers. Much of their work is predicated on information provided by the
insurance companies, but English laws prevent a proper back-flow of infor-
mation to help all insurers learn new warning signs.
Information resting solely in the hands of law enforcement keeps a strong
impetus out of the market. If all of this information were made accessible
to insurers, they would naturally write systems and software to share and
collect what was available. This sharing would be one of the strongest driv-
ing forces behind creating a common language for insurers’systems.
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It’s All Binary to Me
A system run by law enforcement is inherently rigid and the industry would
need to conform to access data it makes available. This could create a
significant third-party market for software development and/or a rash of
in-house development that would potentially work across insurers.
“Understanding a common language will be an Esperanto for fraud inves-
tigation, which can only be a good thing,”said Collard. As the language
provided better channels to discovering new fraud, insurers would focus on
aligning more of their processes with this new language.“Success breeds
success.”
The Acquisition Model
Many major insurers in the European Union have made significant size
growth by leveraging mergers and acquisitions. This creates a unique prob-
lem for the adoption of big data initiatives by creating multiple databases
that an insurer has access to.
On its face, having multiple datasets seems like a boon. In fact, using multi-
ple datasets is an established best practice of fraud detection. However, the
problem is that these datasets are not guaranteed to have a similar archi-
tecture and may not integrate properly.
Since these systems are typically not the focus of an acquisition, they are
often used in tandem instead of combined. This holds the insurer back by
creating multiple views of the customer.
“On this basis, it’s very difficult to create the‘Holy Grail’that is a single view
of the customer,”said Collard.
To address these issues, insurers must make fraud detection and analytics
part of their core business rules and development.“We combined all (busi-
ness) rules in the company and put mathematical modelling on this data,
and got the necessary accuracy to find fraudulent cases with a 72% success
ratio for 20% of all claims,”said Kayıkcıoğlu.
Understanding Legacy Systems
Requirements of today’s data analytics often include an upgrade on some
systems, but fraud detection units have largely maintained an IT budget
that has allowed them to stay up-to-date.
The real concern in terms of systems is the use of a third-party service or
software because privacy protections and concerns lay at the feet of an
insurer. Not having absolute control causes worry at the very least and a
significant liability at the worst. Third-party systems also lack enough custo-
misation to make insurers feel absolutely comfortable.
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“One would’ve hoped that the EU would have standardised approaches to
data protection to actually share data. It’s actually gone the other way for
us. It has created a far greater protection of individual’s rights. This drives
insurers and other institutions to continue to work in silos and that’s where
the fraudsters pick us off,”said Collard.
The Future
Why Is Today’s Fraud Detection Different?
Fraud detection has changed in its location relative to the insured. Insurers
are now able to run predictive and entity analytics during multiple touch
points, essentially as each new piece of information is added.
This not only improves detection capabilities in the event of fraud, but it
also allows an insurer to assess a fraud-risk. Some have begun providing
risky policy holders with high-priced policies in order to drive them to other
service providers.
The insurer today has moved away from a purely reactionary stance to a
proactive effort to keep bad business off of its books. Insurers are seeing
the financial benefit of enacting large efforts to keep fraudulent activity
completely out of the business cycle by identifying it during signup.
“The move from reactively looking at data and intelligence at a practitioner
level, to using analytical tools to proactively look for trends and patterns at
an industry level has been the single biggest step forward from the IFB’s
point of view,”said Fletcher.
Beyond this shift, much of current evolution is around communication and it
presents a clear opportunity for moving forward. The future is about collabo-
ration with brokers and other outside parties as much as with other insurers.
“We need to be a lot more open about this information so we can do the
proper analytics. The fact that we haven’t got information isn’t an obstacle
because most of it can be found with a little bit of research. But, if it’s some-
thing that the policy holder is trying to conceal – such as publicly available
phone numbers being different from what they’ve given their broker – then
it’s a potentially missed link or signal for fraud,”said Jackson.
Blending the Art and Science
While analytics engines may get much of the coverage, the successful fraud
detection unit of tomorrow features a very well-educated staff.
“The more data we capture and the more detail we capture, the better we
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can refine these models. But, there’s only so far we can go with probability,”
said Jackson.
Fraud professionals are being asked to step up to the plate like never
before. They have access to more data and increasingly strong ways to
manipulate it. Staff will need to be trained in these systems as well as new
fraud tactics.
“A strong emphasis on technical excellence guides us on how we approach
fraud prevention and look after the long term interests of Zurich and our
customers,”said Woerner.
Insurers want to automate the fraud process as much as possible to weed
out as many proper claims and false positives as possible. At the end of the
day, however, any flagged accounts still must be reviewed by a person.
A well-trained team can improve models by determining what normal
behaviour is and what fraudulent behaviour is. It’s the narrowing of the funnel
from machine analytics on a large level to individual attention for final review.
“We will never remove this from the human domain,”said Collard.
Where Is The Market Headed?
Use of analytics for fraud detection in insurance is essential to the future
viability of the market.
For new technologies, there is a significant push in the underwriting
process where rules and procedures can be applied before a policy is
issued.“Technically, handwriting scanning, image processing and smart
phone capabilities like geocoding and XDIF information can be used for
advanced fraud solutions. We are working with some R&D centres for these
purposes,”said Kayıkcıoğlu.
However, there is no mad rush to adopt new third-party technologies or
shift infrastructure. Recent market events have made this image much
clearer than many would have thought at the turn of 2014.
Most notably, Heartbleed poked a large security hole in Transport Layer
Security (TLS) and its predecessor, Secure Sockets Layer (SSL). The consum-
er-facing Internet largely relied on SSL as a way to signify that a site and
information were secure in the cloud.
The flaw going unnoticed for years has likely caused a major reduction in
plans for insurers to move any part of operations to the cloud.
“We must protect data at all costs, no matter where it’s handled,”said Jackson.
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The question has been: What is the potential benefit for economies that are
predicated by adoption of the cloud or a cloud-based platform? When the
answer focused on reduced margins and increased competition, cloud-
based analytics were an easier case to make.
Now, insurers must weigh the risks of criminals’ability to exploit the gener-
osity of insurers who keep data siloed versus the criminals’potential ability
to access information if vulnerabilities arise from third-party processing
power.
Where Should the Industry Look?
As austerity budgets continue in the UK and Europe, individuals, groups
and gangs will look to the softest option to make ends meet.
Multiple insurers said their industry can learn a lot from credit card fraud
detection. These companies have adopted and invented new technologies
to detect and deter fraud because of a compelling business reason to act:
regulators look heavily at money laundering.
“There is an overwhelming logic that says these technologies are absolutely
relevant to what insurers should be doing”and even without regulatory
imperatives, these businesses should recognise the benefits available to
them, Collard said.
“Professional fraud analytics are crucial to bring fraud detection into the
next level of excellence. At Zurich, fraud detection analytics are there to
support our people and to assure the highest level of objectivity,”said
Woerner.
The Future of Third-Party Data
Third-party data may play a role in fraud detection but it will likely reside in
systems run by the IFB, police, and other law enforcement for the near term.
Major database providers don’t yet speak the same language as insurers
when it comes to privacy and value, so it’ll take a shift from the IT industry to
start the adoption of third-party data centres and fraud detection services.
In the UK, customer data is very strictly monitored. Similar protections are
in place in France and Germany, and EU nations are likely to move toward
stricter data controls in the future. Privacy concerns will naturally impact the
data insurers use and own, so broad sharing will likely remain relegated to
law enforcement unless there is a significant shift in political climate.
Many insurers and other industries still feel burned from outsourcing and
offshoring their customer service to third-parties. Fraud detection systems
become worthless when errors are introduced, so there is little likelihood of
complex systems being outsourced to anyone, even native developers.
15. 15
The Role of Data and Analytics
in Insurance Fraud Detection
Closing Remarks
The potential of today’s insurer lies in the realm of new data analysis, but its
path is wholly determined by the human aspects present in insurance.
The largest hurdle faced by insurers remains legislative barriers to sharing
and pursuing information. Where legislation allows, insurers are poised to
collect and analyse new data and deliver better results. However, tighter
controls over an individual’s privacy may limit what analytics can do by
stifling information pools.
The push toward Big Data and analytics for fraud is coming with a clarion
call of automation and modelling. Unfortunately, a pure automation oper-
ation can create as big of an opportunity for fraud as already exists in the
market by producing exploitable data pattern recognition.
Fraud detection still needs a human touch. Even the most advanced
systems still deliver a data product, not a finalised piece of information.
“People are still required to take this analysis and produce the final intelli-
gence product that is useful to insurers,”said Fletcher.
While data is at the core of the current revolution in insurance industry
practices and advances, it must inherently remain an industry that relies
on gut feelings and human insight. A proper mix of machine and human
review can bring fraud detection to a new level, and an analytics backbone
helps assure the highest level of objectivity.
Ultimately, insurers face a choice of absorbing the cost to adopt these new
fraud detection capabilities today or of maintaining current operations in
hopes that analytics will standardise and cheapen before increased compe-
tition presses margins too thin.
FC Business Intelligence’s Analytics for Insurance Europe conference and exhibition takes place
October 6-7 2014 in London. The event will draw together thought leaders from Europe’s leading
insurers. Over the two day event over 30 speakers will explore how analytics can be used by
underwriting and claims teams to reduce costs, create operational efficiencies, detect more fraud
and price more accurately. It will have a strong pan-European focus and will attract 150+ senior
people from leading insurers and aggregators. With the contributors like the ones listed in this
report along with other key spokespersons from international financial institutions, the event will be
number one for analytics in insurance in 2014.
To register, visit www.analytics-for-insurance.com