Let’s face it: when I look in the mirror, I have to admit I’m a bit of an InsurTech and behavioral psychology nerd. After having spent nearly a decade being responsible for product design, strategy, revenue, margin, and overall product performance, I’ve seen numerous technology trends come and go. Only some of these made the cut and can be found supporting our daily lives in a beneficial way. That also goes for a great number of innovations in insurance.
The industry is certainly moving into what Forrester branded “the age of the customer” and the forces of digital disruption that we are constantly seeing have been combined with a refocus on the customer. For sure that also goes for the future of fraud analytics. That’s why I’d like to share some comments on why this will no longer be only for the fraud department to worry about.
Taking Care of the Customer
First and foremost, customer experience will absolutely be a top priority on everyone’s roadmap next year. We are living in the age of Uber and Amazon – customers now expect everything instantly, in real-time, and in many cases, they are already beginning to enjoy completely digital insurance lifecycles. With the rise of savvy insurtechs focusing on customer experience, larger carriers risk losing customers if they remain complacent to this drastic change. And even the largest of carriers are staying ahead of the game with updated brands, new marketing efforts and more. For the consumer it couldn’t be a better time to buy insurance products.
Carriers have already undertaken huge investments in modernizing their core systems and growing their ecosystem of value-added, AI-powered services. And most are getting to the point where they’re ready for a touchless process.
AI has certainly moved beyond the hype – I’m typically using AI and machine learning at every carrier I work with. And the use cases within insurance are continually growing and maturing. AI will be the engine behind the customer experience.
Fraud is one of the largest costs for insurance carriers, therefore prevention is fundamental to ensuring a seamless experience. Accurate fraud scores at underwriting and continual proactive monitoring are going to be key to understanding which customers can be safely streamlined. Claims fraud detection need to be fast and aggregate data from numerous external sources. Leveraging fraud prevention techniques in this way allows carriers to process claims in seconds, reducing overall processing costs and also satisfying the good customers you want in your book.
Enabling a frictionless customer experience with fraud prevention at its core will be a 2020 goal at carriers across the globe.
Technology Enables Fraud Itself
While carriers are beginning to adopt more sophisticated fraud detection tools, modern technology has also made it far easier to commit opportunistic fraud. Increased digital interactions create a faceless experience, and insurance fraud increases in this environment where it truly appears to be a victimless crime. This challenge will present itself more aggressively in the coming years.
However, this can be opposed through fraud prevention and other techniques, and if so, I see the trend quickly reversing as carriers leverage sophisticated models to proactively identify and combat new fraud patterns.
I’m already seeing this from the many fraud pools I’ve been privileged to be an active part of over the years, and the desire to collaborate between carriers is increasing. Whether it’s sharing known fraud information across carriers or leveraging a central consortium, straight-through processing has increased the need for these shared services and will continue to do so.
We are also witnessing our carriers sharing fraud trends, modus operandi, scenarios and more across the board to stay ahead.
Let the (R)evolution Begin!
Now is the time to revolutionize your insurance fraud analytics capabilities, enabling AI-powered triage to serve your honest customers exceptionally fast, while instantaneously flagging bad risks for further investigation, or not bringing them into the business in the first place.
The original article was first published at Insurance Innovation Reporter: https://iireporter.com/the-revolution-of-insurance-fraud-analytics-in-2020/
About the author
Dan Gumpright has worked in the insurance industry for ten years. He has developed, managed and implemented insurance claims and policy optimization and fraud detection software for global tier 1 insurance companies and numerous insurance fraud consortiums. Dan currently works as Global Head of Product for FRISS. Dan regularly speaks and writes about insurance fraud for publications and conferences around the world.