The future of fraud part 1
Corruption, embezzlement, fraud, these are all characteristics which exist everywhere. It is regrettably the way human nature functions, whether we like it or not. What successful economies do is keep it to a minimum. No one has ever eliminated any of that stuff.
Alan Greenspan, Former Chair, Federal Reserve of the United States
Insurance fraud costs. In the UK insurers detected and prevented £1.3bn in fraudulent claims, with one scam uncovered every minute. The Insurance Fraud Taskforce calculate the total cost to be in excess of £3bn, with undetected fraud costing more than £2bn in addition.
There is also the cost of measures required by insurers to fight it, with the ABI reporting this to be in excess of £200m per year.
And the problem is a global one. In the US the FBI report the problem, in non-health lines alone, to be in excess of a staggering $40bn per year.
These statistics outline a significant problem, but one that, in the UK, is being tackled with some success. However, before we look ahead at what the future of fraud looks like in the claims sector, we must accept it will continue to exist. This feels a little depressing, doesn’t it? Winning the fight against fraud is not an end game where fraud stops existing. Instead it is an acceptance that measures to protect against fraud will always be necessary and part of operational best practice. It’s more like we’re just keeping up with the fraudsters.
Over the next three weeks in these serialised posts we consider the future of fraud by tackling these statements:
- Insurance fraud will continue to be 'little and often' with fraudsters repeatedly exploiting weak processes where risks are low and aggregated gains are high.
- Insurance fraud in personal injury claims is here to stay. Civil reform offers new processes to exploit in an area where there is comfort taken from their experience and past success.
- Fraudsters will replicate tried and tested methods in exploiting new opportunities. This will include the industrialisation of claims.