The digital age has raised most peoples’ buying habits and service expectations, a fact that has only been accelerated by the global pandemic. As businesses adapt to meet the new demands of customers, so do the fraudsters who react and adapt their own practices to take advantage of the opportunities that digital buying journeys present. And so it becomes a race, or perhaps a game of whack-a-mole. As one fraud scheme is detected, and the door closes, the fraudsters open another.
The challenges presented by the ever–evolving fraudsters, leads to a requirement for businesses to continually improve their fraud defences. This is especially the case for insurers, who face fraud attempts throughout the entire policy lifecycle. The high–profile cases we hear about tend to be large personal injury claims, the detection of which protects the insurer and as a by–product the customer too by delivering savings that do not increase premiums.
Tangible fraud schemes
A more tangible fraud scheme that has a more visible impact on both the insurer and the consumer is ghost broking. Unlicenced “brokers” are only interested in making money and target individuals who pay higher premiums, such as young drivers or those with convictions, with attractive offers. Unfortunately, whilst many of us recognise that when something appears too good to be true it usually is, to their victims, these ghost brokers’ appear professional and trustworthy. This leaves them buying a policy which is based on facts that the ghost broker has misrepresented which, in turn, the insurer will cancel leaving the customer out of pocket and having to buy a genuine policy. In the worst cases if the insurer does not detect the misrepresentation and there is an accident, the policy will be invalid.
Insurers deploy their counter fraud efforts to detect the ghost brokers, to spot the policies that have been placed on cover with false information, and the use of compromised identities. Typically, using data and suppression lists to stop suspected cases getting a quote. Given the way ghost brokers change their style, a lot of detection is carried out post sale using data washing techniques after the ghost broker policy has been placed on cover. The problem with this process is that the insurer is on cover and is now the Road Traffic Act insurer, not to mention the burden of cost of running such processes.
Stop ghost brokers in real time
The aim should surely be to improve the defences to prevent the ghost broker putting the policy on cover in the first place. At FRISS we believe in a combination of suppression lists at point of quote combined with real time network analytics, combining all the data available, at the point of sale. When combined with third party data searches that enable the insurer to spot anomalous relationships in the data presented by the ghost broker, the end result will make it harder for the ghost broker to put risks on cover, reducing the need for the post sale processes and preventing insurers from becoming an RTA insurer.
The techniques that worked to prevent fraud in the past including batch data washes, do not fit with the customer journey of the future. Real time fraud detection, using real time data is the future and will enable insurers to have more confidence in the quality of their portfolio and to focus on their genuine customers.
