At a glance
- Zurich fraud manager Scott Clayton discusses the on-going battle against fraudulent activity
- Tools and techniques used to catch criminals getting ever more sophisticated
- Insurers always looking at new ways to spot fraud
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The fight against fraud is an ever-evolving battle between insurers and criminals.
Insider caught up with Scott Clayton, Claims Fraud and Investigations Manager at Zurich, to discuss the claims battleground and detection tools available to an insurer, as well as taking a look at what tools an insurer may be able to use in the future to uncover fraudulent claims.
Q: What type of person is most likely to commit fraud?
A: We see fraud in all shapes, forms and sizes across pretty much all products and distribution channels. People commit fraud from all walks of life, backgrounds, ages and demographics. We do not specifically categorise certain areas over others.
The motivating factor for someone to commit fraud is normally need, greed or a perception that it’s easy. There are two distinct areas of fraud. We have the opportunistic fraudster, who will maybe try it as a one-off or try it again if he or she is successful. Then we have organised fraud where criminals deliberately target our processes for financial gain on a wholesale basis.
The challenge for us is to make sure that our controls are embedded at every part of the process keeping up with external factors that might influence our processes, such as legal reforms or economic conditions.
Q: Where is the battleground on fraud currently being fought?
A: The whiplash issue has blighted the industry for a number of years. Fraudulent whiplash claims play a significant part in what the model of motor insurance claims currently looks like. This has been driven by poor behaviours in the market.
Fraudsters are always trying to keep one step ahead, but it is for us to remain vigilant and responsive to changing and evolving motivating factors. It is a transactional battleground, and we can’t fight this battle in isolation.
Scott Clayton, Claims Fraud and Investigations Manager at Zurich
The other area is exaggeration of personal injury. This is a particularly challenging area as the assessment of injury can be such a subjective matter. Some see that grossly exaggerating an injury can be an opportunity to secure sometimes life-changing sums of money and significantly more than they are entitled to.
And then there is online fraud. ‘Ghost broking’ is a perfect example. It is a multi-million pound scam where these ghost brokers operate through websites or small ads offering cheap insurance. These fraudsters will take out policies purporting to be someone else and will then sell those on to unsuspecting people having often bought the policies using stolen credit card data. And in some cases they can offer totally fictitious policies. The internet provides a faceless front for criminals.
Q: What is the most important tool an insurer can use to fight fraud?
A: Fraud detection relies fundamentally on the skills and vigilance of claims handlers and underwriters. While tools are effective at increasing detection, the human aspect is vital in interpreting the output and translating this into evidence.
Q: And can ‘big data’ help insurers?
A: Data collection and analysis continues to present challenges for the industry. There are elements we do well. An example is the Insurance Fraud Bureau, which has access to cross-industry data and analyses this to identify organised fraud affecting a number of insurers.
There are gaps, though. There is a lack of certain data in the commercial space and frustration at linking into some external agencies such as the DVLA and Department for Work and Pensions.
But we are at a better place now because insurers are investing more in technology and people, and are collaborating to tackle issues that are affecting the industry.
Q: Are the criminals winning?
A: Fraudsters are always trying to keep one step ahead, but it is for us to remain vigilant and responsive to changing and evolving motivating factors. It is a transactional battleground, and we can’t fight this battle in isolation.
People move insurance companies and know how to avoid detection, but it is important the insurance industry retains its collaboration, as that is when we have the best success. The industry has taken some fantastic strides in recent years for the greater good of the honest premium paying public.
Q: Is telematics helping the industry in its fight against fraudulent claims?
A: It remains to be seen. We still need to ascertain which parts of the telematics industry is more beneficial than others. Clearly the information pinpointing the whereabouts of vehicles at certain times and locations are relevant to insurers. But we are a long way off from all cars being fitted with telematics devices. And we need to be very careful by striking a balance between investigation and any form of intrusion.
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Q: What about using the internet and social media to build cases against fraudulent activity?
A: Social networking sites, like Twitter and Facebook, provide insurers with a rich investigation tool because they provide publicly available information for free.
We also use the internet to do validation and background checks. It is much more than simply doing a Google search. But, again, everything we do is completely legal, compliant and above board.
Q: Finally, could advances in technology – such as more detailed satellite photography and better weather forecasting – aid insurers in their detective work in the future?
A: I think we are some way off yet. If, for instance, we were evaluating a property claim before and after a loss, I don’t think we are at a stage where we could go to Google Earth and look at a picture one day and go again three days later and see something different.
And it is the same for weather forecasts. The current weather data and traditional techniques of inspection are sufficient for now although more pinpointed weather data will clearly assist us.