Since we last provided our insights on the coronavirus, things have changed. Lockdowns have gradually loosened in most countries, leading to a “business as usual” amount of claims and possible fraud investigations. This might seem like a good sign, but really what it tells us is that nothing has changed. And if nothing changes, the outcome stays the same – we know what that will be!
Claims volumes have mostly stabilized. After an initial surge, investigations now hover near normal relative to the number of claims.
The new normal
Working from home became the focus of most insurance companies this spring, and the past few months have shaped the “new normal” of what work looks like. And they managed this quite successfully. Now it’s time for them to take a step back and look at their internal processes, the availability of tools, and the knowledge of their employees to make sure they are prepared for the next phase and the unknowns they will face.
In the fight against fraud, carriers must not aim to be as successful as they were before the coronavirus pandemic hit – they must be better.
As this blog is being written, Europe is sliding into a second wave of coronavirus infections with tighter measures that will undoubtedly affect companies and individuals alike. We are seeing fewer bankruptcies than in 2019, but the number is steadily increasing. Many companies were supported by the government to help survive the first lockdown, but their reserves are now disappearing. The fear is that they won’t survive another few months of restrictions. Undoubtedly, employees will be let go, costs will be cut, and bankruptcy may be closer than ever.
Circumstances like these are the soil on which fraud is growing: pressure, opportunity and rationalization. Are you ready for it?
Global issue, global impacts
There are of course differences between regions:
- The European Nordics were less affected economically by the coronavirus pandemic because they managed to control the virus quite rapidly and there was almost no lockdown.
- South European countries (and many others) suffered from losing their entire 2020 tourist-season.
- In most Western European countries we see a 10 to 20% drop in GDP, high unemployment rates and increasing numbers of debts.
- In many Latin American countries income is much lower and fewer people have insurance. Still, fraud is clearly on the rise as a result of coronavirus pandemic.
- The Coronavirus is only one aspect of turmoil in the United States as they are also dealing with unrest, demonstrations and the upcoming elections. These issues often overshadow the impact of the pandemic on economic welfare.
COVID-19 does not discriminate, and the effects will be seen across the globe. The financial pressure element of the fraud triangle will become more and more severe and fraud will be increasingly seen as a way out for desperate people and businesses.
About the author
Martino Scheepens is a Customer Success Manager at FRISS and a 30-year insurance industry veteran. He began his career at a local bank and later started his own successful intermediary. After applying his experience across the industry through finance, IT, underwriting, claims and support, it is now Martino’s mission to ensure all FRISS customers realize successful implementations.