This article was produced in partnership with Crawford & Company
Mia Wallace of Insurance Business sat down with Peter Oakes, UK head of fraud, Crawford & Company, to discuss what’s happening in the UK’s insurance fraud landscape.
The insurance fraud landscape is a delicate ecosystem, subject to the whims of a vast variety of micro and macro factors. As such it can be something of a Herculean task to accurately assess where the market stands, which is where specialists such as Crawford & Company’s UK head of fraud Peter Oakes come in.
Offering an overview of the current insurance fraud landscape, Oakes highlighted that most insurers and compensators remain braced for a significant increase in fraudulent claims in the coming months. Every previous economic downturn or significant financial restructuring has been accompanied by a correlating increase in fraud levels. Now, he said, a combination of Brexit, COVID-19, cost-of-living increases, rising fuel prices and inflation in the economy will drive a significant increase in ‘need’ based fraud levels.
“Government measures to support business and society have largely shielded households and businesses from the main financial impact of COVID,” he said. “As that support falls away and loans need to be repaid, insurers can expect to see significant increases in opportunist insurance fraud. Over the last two years we have seen insurance fraud growing in property, and personal protection policies such as GAP, income protection and mortgage repayment policies.”
More encouraging, Oakes said, is the fall in the level of fraudulent claims in the motor space – the latest round of whiplash reform has significantly reduced the overall number of claims. However, the sector is continuing to see the professional enablers and claimant representatives seeking to circumvent the CJCA by targeting vulnerable road users or targeting personal injury claims that do not relate to whiplash.
Accident management businesses and claims farmers retain a vested interest in the exaggeration of genuine claims and, regrettably, the fabrication of fraudulent claims. The claim farmers responsible for cash for crash have invested in other insurance lines, he said, including property claims assessment, energy broker claims, GAP insurance claims, COVID claims and of course business interruption claims.
“At the same time insurers continue to look to develop and support fraud strategy at an industry level through the strategic threat assessment and execution of identification, management and prevention through the IFB, IFED and IFR,” Oakes said. “At enterprise level, the larger insurers continue to invest and develop increasingly sophisticated data and AI-based solutions leveraging big data and data insights, to support the expertise of their counter fraud teams.”
Meeting the market’s demand for more innovative and sophisticated solutions is Crawford Intelligent Fraud Detection (CIFD) – the firm’s complete solution for clients encompassing the full range of identification, management and prevention of insurance fraud across all of the insurance lines where it manages and adjusts claims for its clients. Exploring how CIFD came about, Oakes noted that the business regularly engages with its clients to identify industry and client concerns.
A recent global client review across 90 countries identified insurance fraud as the number one concern, he said, and CIFD is Crawford’s response to the needs of its clients. The company has a long-standing commitment to the identification and recruitment of the best subject matter experts and around the globe, it has recruited leading fraud practitioners.
“In the UK, organised fraudsters are as advanced as any other jurisdiction demanding an equal investment in our own people,” he said. “We have recruited extensively including leading lawyers, forensic accountants, intelligence analysts and specialist fraud indicators. Reflecting our approach to all aspects of insurance claims management we see the value of technology to support our people.
“In recent years, there has been significant progress in the development of systems able to syndicate claims data, including the unstructured data scattered across legacy claims systems, with the ability to apply AI developed rules to accurately identify high risk and fraudulent claims. Our requirements for a platform include the ability to be rolled out across the many jurisdictions around the globe where we loss adjust and manage claims.”
The starting point of what sets CIFD apart from other solutions available in the market is Crawford’s scale and the extent of the data it holds based on its market share, he said. In the UK, Crawford is syndicating detailed claim records and data relating to over 750,000 property and motor claims. It is then screening that data against relevant external datasets including the IFB, claims data and IDV datasets.
The company’s business rules have been incredibly effective in the identification of fraud in motor, property and casualty claims, he said, and all of its existing fraud IP is retained and embedded in CIFD. However, Crawford will now use the power of AI and machine learning to create and refine ever more accurate fraud identification algorithms. CIFD will allow the firm to identify and respond quickly to the changing nature of both organised and opportunist fraud.
“Another feature of the system is its almost limitless capacity to integrate relevant third party and open-source datasets that provide a correlation to fraud risk,” he said. “CIFD is a complete solution encompassing not just fraud identification but also includes a complete solution for the investigation and management of insurance fraud from the point of claim to litigation to trial to recovery where appropriate.”
Crawford deliberately selected the UK to develop the first phase of CIFD, he said. The fraud landscape has evolved significantly over the last 20 years. Regrettably, the UK has a resilient claims management and professional enabler network developed to maximise the compensation to be extracted from genuine claims and to fabricate fraudulent claims. But, in response, UK insurers have developed central bodies to facilitate a strategic response by disseminating large amounts of actionable intelligence.
“Insurers are well used to syndicating data and using data analytics to support human expertise and knowledge to manage the significant fraud risk,” he said. “We believe that a solution developed in the UK has the ability to deliver effective counter fraud management across our global business. In the UK we have already seen a significant uplift in our ability to identify and manage insurance fraud. However, what is clear is that we are at the start of a journey, and we are committed to the evolution of AI. History teaches us that fraudsters are agile and resilient and we must always remain one step ahead.”
Peter Oakes is a counter fraud specialist, with over 20 years of experience. As UK Head of Fraud at Crawford & Company, Oakes is recognised as a market leader in the development of counter-fraud strategies and and intelligence-led fraud investigation.
