With most of society stuck transacting business behind a screen because of the coronavirus pandemic, and people more reliant on technology than ever before, there has been some concern in insurance circles around whether this “new normal” business environment will cause increased levels of insurance fraud. The question was raised at the recent Future of Insurance Canada conference, in which four Canadian insurance leaders shared their perspectives.
On the property & casualty insurance side, Irene Bianchi, president & CEO of Peel Mutual Insurance, said she hasn’t identified any COVID-related fraud trends yet, but that there are some “disturbing nuances” that are starting to come to light. One issue is that some consumers have waited to submit claims until six or seven months after the loss-driving incident happened, which has resulted in damages getting progressively worse, and therefore more costly, for insurers.
“They didn’t want to report it because they didn’t want somebody coming into their home during COVID, and they didn’t want somebody coming to do repair work during COVID. So now, we’ve got some situations that have basically exploded because the [damages] have been left for months and months,” said Bianchi. “The claims where there’s been no mitigation, and the bills are getting larger and larger, we’re really having to keep our eye on that and try to understand the ins and outs of the claim to ensure everything is the way is should be.”
The fraud question is “a discussion we’re having with a lot of our clients,” said Chris Cornell, partner in the Financial Services Audit practice at KPMG Canada. In some lines of business, such as usage-based products like personal auto, activity has reduced during COVID due to lockdowns and widespread remote working, and so the amount of insurance fraud in that space has likely decreased in the short-term, Cornell explained. However, it could be a different story when the industry comes out of the pandemic.
Carriers are trusting their customers more than they ever have before, according to James Swayze, senior executive, Symbility, CoreLogic. In the claims space, for example, insurers are enabling consumers to take photographs of their flooded basement or their damaged vehicle in order to prove their claim. Swayze commented: “They’re trusting more of the customer involvement. And I think the experience is being enhanced for everybody. That trust just continuously gets fostered as it becomes more humanized.”
Read more: The evolving nature of insurance fraud
But that trust could also trigger problems, especially if a consumer attempts to falsify data and submit a fraudulent claim. Does giving customers the opportunity to start their own claims inspection process via mobile apps and other tools open new windows to fraudulent behaviour? The panellists argued otherwise, instead highlighting how self-service claims tools today are already so advanced that they are able to validate most information and detect fraud, or at least flag any abnormalities or suspicious data, for insurers almost in real-time.
“I’m very bearish on this idea that there are affordances in digital tech that just allow us to verify, so that we can operate from a position of trust and say: ‘We trust what you’re saying, and we will validate it on the back end,’” said Anna Foat, director, Global Digital Transformation Office, Sun Life Canada.
“A lot of what we’re trying to do in our IT organization is take a look at some of those tools that we can plug in, because digital does provide a whole lot more transparency, and check-check double-check than a paper form. We like our paper form, it’s been a security blanket for a long time, but the World Wide Web and how all the information intersects with one another just gives us the ability to validate information without it being an unpleasant client experience.”
