The battle against fraud is one of the biggest challenges facing insurers and brokers alike – and one that it finally appears that the industry is taking seriously.
Criminals have created a strong business from fraud, and traditionally such losses have been viewed by victims as a cost of doing business. However, according to a new study by Experian, the trends show that organisations are now modernising their strategies, making them more predictive and proactive and enabling fraud teams to be integral in creating sustainable business growth – quite a turnaround.
With that in mind,
Insurance Business UK reached out to Nick Mothershaw, Director of Fraud and Identity Solutions at Experian, to find out what insurers and brokers can be doing to address fraud issues.
“At the moment people have got patchwork fraud solutions and in order to properly address your fraud challenge all these big things need to be brought together into one view and this one view needs to be continually adaptable,” commented Mothershaw.
“For instance one of the things we’ve been recommending for a while for insurers to look at is a device footprint. This is a way that we can often find ghost broking as the ghost broker is often using the same device to apply for policies in lots of people’s names.
“What you don’t want however, is one system that does that and another system that checks against other things. What we’re seeing is that it’s best to have a simple solution that brings everything together.
With this in mind, Experian has recently launched its Cross Core product – a platform that enables the client to link together all of their fraud solutions into a single IT platform. However, Mothershaw admits that “for a smaller broker it’s too expensive… we’re aiming at insurance companies and larger brokers.”
While Experian does offer products aimed at smaller companies too, he believes there are steps that brokers can take to address fraud regardless of their budget.
“A major insurer would use a wide and deep solution whereas at the broker level, the broker is often in charge of the ID element of the transaction and therefore is more prone to things like identity theft. So they tend not to be looking systematically for fraud it’s more about doing due diligence.
“For example, brokers should look for false identities in terms of taking out insurance using an identity which they then tend to sell on. Another thing we see in terms of fraud is manipulation where people are introducing extra parties in an effort to drive the premium down when their quote isn’t favourable.
“In terms of the ghost broking element, we usually see that online – so if you have an online platform you need to be aware of people using your solutions to harvest policies that they can manipulate and sell on. Generally what we’re seeing is that ghost brokers are preying on rural Scottish towns.
“The reason these areas are targeted is because of the premium the ghost brokers can get. They generally have very low crime rates, the target population is often more elderly and so the premiums that can be offered by that individual then become very favourable.”
Mothershaw admits that the battle has become more complex with the added reliance on online platforms – but believes this is something that brokers can address by keeping their eyes open.
“The relentless march towards everything going online certainly isn’t helping – you’re not meeting people face to face and this is creating an anonymous channel for the fraudster,” he said. “The more that’s done remotely, the more the fraudster will exploit those channels.
“However, there are things that can be done. Education is one thing – make sure you’re aware of the scams that are going on. Also, be vigilant – make sure you’re watching out for it and look for those people who are looking to leverage the kind and friendly broker to gain access to policies they shouldn’t be getting.”
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