Fraud remains a top concern for insurers worldwide, according to the findings from the Reinsurance Group of America (RGA) 2024 Global Claims Fraud Survey.
The report highlights the ongoing challenges insurers face in managing fraud, with 74% of survey respondents indicating that the number of fraud cases is either holding steady or increasing compared to previous years.
This marks RGA's second global fraud survey, following its 2017 edition. Both surveys focus on data from life and health insurance claims professionals, with the latest report drawing insights from respondents in 2023.
RGA notes that the number of survey participants tripled from the 2017 version, with 60% of the respondents coming from the Asia Pacific region, which could influence the survey’s overall trends and insights.
The survey categorizes fraud into three primary types. Organized fraud involves criminal groups aiming to profit from insurance fraud to fund other illegal activities. Deliberate fraud occurs when a policy is taken out with the intent to file a future claim for financial gain, often involving misrepresentation.
Opportunistic fraud happens either during underwriting, when individuals misrepresent their health status, or at the claims stage, where the extent of a disability is exaggerated.
Fraud is seen as most significant during the claims process, with one out of every 30 claims impacted. According to RGA's survey, 35% of respondents said claims fraud had increased, while 39% reported no change. In underwriting fraud, 85% of respondents noted either no change or an increase in fraudulent activities, with 17% seeing an uptick.
The survey indicates that consumers are the primary perpetrators of fraud, according to 72% of respondents. Common examples include misrepresentation, non-disclosure, falsified documents, and filing claims for disability benefits while continuing to work.
Insurance agents rank second, at 41%, for their role in coaching policyholders on fraudulent claims and validating false documents. Doctors also play a role, with 23% of respondents citing them for actions such as altering medical records or coordinating with patients to file false claims.
RGA’s survey highlights that fraud is not confined to external actors, with 20% of respondents pointing to others working within the insurance industry, such as organized crime, impersonations, and falsified death certificates.
More than 50% of respondents believe life (mortality) products are the most susceptible to fraud, while health (medical) products follow at 27%. Critical illness claims account for 9%, representing an increase from previous survey results. RGA points out that the product mix offered by insurers could have an impact on these rankings.
Fraud significantly affects the timeline for processing claims. While the typical end-to-end time for a claim is around three weeks, this increases to 68 days – more than three times longer – when fraudulent activity is suspected.
RGA noted that this extended timeline often results from claims professionals needing to consult with external parties, such as doctors and other relevant individuals. However, insurers are encouraged to reassess these timelines, as most consumers do not have fraudulent claims but may still face extended delays.
When fraud is confirmed, 57% of respondents said they either "always" or "sometimes" report cases to law enforcement. For cases that proceed to court, 44% of respondents reported successful prosecutions within the past three years, with life benefit cases achieving the highest success rates.
Despite these figures, RGA’s survey revealed that 72% of insurers prefer to deny claims for reasons other than fraud, even when fraud evidence exists. The reluctance to pursue fraud charges stems from difficulties in proving fraud, concerns over reputational risks, and a general cost-benefit analysis of pursuing such claims.
The survey found that 78% of respondents have dedicated internal teams or individuals focused on fraud investigation, reflecting the industry’s growing recognition of the risks fraud poses. Additionally, 82% provide fraud recognition training for claims assessors.
Two-thirds of respondents also utilize fraud detection tools, such as industry databases and established fraud indicators.
Despite these efforts, RGA suggested that insurers could improve their fraud prevention strategies. For example, only 45% of respondents indicated they conduct proactive fraud assessments on in-force portfolios, which presents an opportunity for increased vigilance.
Artificial intelligence (AI) plays a dual role in fraud. While it can enable fraudsters to commit crimes—such as using AI-generated documents or voice cloning — insurers also employ AI to enhance fraud detection. According to RGA, one-third of respondents use AI tools like expert systems and machine learning to identify fraudulent activities.
RGA’s survey suggested that fraud is likely to increase in the coming years, with 68% of respondents anticipating more fraud over the next three to five years. Factors driving this expectation include economic pressures, digital tools, and the growing sophistication of fraudsters.
In light of these trends, RGA recommended that insurers continue to invest in fraud detection technologies, establish dedicated fraud teams, and train staff to recognize and address potential fraudulent activities.
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