84% of industries experience this type of fraud, but insurance professionals witness it most often. Here’s how brokers can stop it.
Brokers who recoil against fraud should not feel alone – the problem is hardly relegated to insurance. In fact, 84% of fraud mitigation professionals believe that fraud traverses industry lines and affects multiple markets at once, according to a new survey published by LexisNexis.
Insurance professionals should be concerned, however, about the disproportionate amount of cross-industry fraud in their sector. Some 13% of insurance respondents reported that “every single one of their fraud cases is connected to an outside industry,” whereas 5% of those in financial services and 4% of those in government witnessed the same.
Despite the frequency of scams, however, brokers have the capability to detect cross-industry fraud and aid in preventing it.
“When we looked at financial markets, health care, retail, a lot of the fraud solutions we provided to individual markets, we wondered if we could identify how fraud permeates across multiple markets,” said Bill Madison, CEO of LexisNexis Risk Solutions’ Insurance Sector.
Even within insurance, fraudsters have developed sophisticated methods of scamming multiple entities in one sweep.
A common example of this occurs alongside medical fraud. Since P&C insurers are not given broad access to information held by health care providers, perpetrators can defraud multiple carriers in both the P&C and medical arenas with claims originating from one scam.
Brokers have an important role to play in combating fraudsters. While the researchers acknowledge that the landscape has grown progressively more complex as the result of an evolving distribution channel, more often than not, brokers are still the first point of contact for new clients.
“It all starts at the beginning of the relationship with consumers,” said Madison. “Solutions can be as simple as the identification process, and making sure applicants are on the grid based on the information they entered into the system.”
Brokers also benefit from anti-fraud initiatives indirectly, as the analysts believe that increased rates of detection leads to faster decision-making, which eventually aids in consumer retention.
“The broader data perspective provides analytics that will reduce false positives, and allow insurers to greenlight more transactions and expedite the process,” said John Lorimer, Vice President, analytics and product management, LexisNexis Risk Solutions. “As we get more into mobile, that’s going to become critically important, and can become a differentiator.”
