Tackling the changing insurance fraud landscape  

This blog summarizes insights from a conversation between Michael Anderson, Industry Advisory Lead of Claims at Guidewire, and Christian van Leeuwen, FRISS Co-founder and CSO. FRISS and Guidewire have been long-term partners. What do they see happening in the world of P&C insurance related to fraud prevention?

Prepare for a changing fraud landscape 

With the rapid development of affordable artificial intelligence tools insurers struggle to keep up with evolving fraud schemes.  Eminent examples include:  

• photo and document manipulation through deep and shallow fakes;

• ghost broking (where policies are fraudulently sold to unsuspecting clients);  

• false theft claims;

• soft fraud, or padding invoices;

• VIN cloning (the use of stolen vehicle identification numbers to sell stolen cars); and  

• staged accidents.  

Advanced technology like AI will significantly enhance insurers' ability to detect and prevent fraud. Fraud itself however is unlikely to decrease overall. Insurers are exploring ways to adopt more sophisticated technologies. Fraudsters do quite the same, creating more complex fraud schemes such as deepfakes and fake identities. 

Increased digitalization may increase fraud risk

Increased digitalization has many benefits: processes become more efficient, insurers get access to more data and customers experience easier and faster service. But new risks are arising at the same time. Digital fraud has been on the rise since 2020 and although some fraud schemes are not new, fraudsters have adapted their modus operandi to exploit the gaps in insurers' digital environments. Moreover, digitalization has made it easier for fraudsters to communicate beyond national borders, allowing fraud schemes to spread quickly between countries. This sentiment is backed up by a 2022 TransUnion study, showing an increase in suspected digital fraud in insurance by 2022 compared YoY.

While the motivations for committing fraud remain largely the same (financial gain), the tactics have evolved, particularly with the advent of digital claims filing and policy purchasing processes. Insurers must stay vigilant to new threats, such as deepfakes and synthetic identities, which pose complex challenges in verification processes. At the same time, the industry faces a talent gap: experienced SIU (Special Investigative Unit) professionals are nearing retirement, while newer recruits lack the deep knowledge of complex fraud schemes. AI-driven hybrid learning systems, where AI and human expertise collaborate, will be crucial for staying ahead of these emerging risks. 

What can you do to prevent insurance fraud? 

The question arises as to how to improve customer service while protecting insurers through automated fraud detection.  

The partnership between FRISS and Guidewire focuses on the entire claims value chain. The real value to insurers is in:

• every policy request and claim being reviewed for possible fraud;

• less dependence on the adjuster's fraud awareness skills;

• more accurate referrals are delivered to the SIU; 

• the speed in which a policy request or claim can be referred to and researched by the SIU; and

• quickly placing it back into the adjuster’s queue if no fraud is determined. 

Guidewire's comprehensive insurance platform and FRISS's expertise in AI-powered fraud prevention, create a more efficient, secure, and reliable insurance processing environment. The specialized underwriting and claims analytics integration accelerators allow insurers to streamline and automate their processes to the greatest extent possible, automating fraud detection, resulting in operational efficiencies, and, more importantly, increased customer satisfaction because the majority of claims are legitimate and can be resolved quickly. 

We are committed to helping insurers leverage data and analytics to tackle challenges in underwriting and claims so they can provide excellent customer service.     

Interested in our claims solution? 

Come visit us at Guidewire Connections, booth S6 in the Claims Management Area.  

Or, check out the demo video of FRISS Guidewire ClaimCenter: