In the Annual Fraud Indicator 2016, the Association of British Insurers reported 67,000 incidences of motor insurance fraud, valued at £835 million. That made motor insurance fraud the most common and highest value form of fraud the ABI tracks.
The UK’s Insurance Fraud Taskforce's final report on Insurance Fraud (published months before the Annual Fraud Indicator) found that "71% of stakeholders reported that data is not being used adequately in fraud detection and investigation," and recommended "improving the data available in fraud databases and data sharing schemes."
This call for increased collaboration comes at a time when the UK’s motor insurance market, the third largest in the world, has experienced an unparalleled period of change due to economic conditions, technological advancements, and rising customer expectations.
These market forces, combined with consumer-data protection laws, increase competitive pressure and threaten to further entrench the zero-sum game mentality: "If we deflect fraudsters to our competitors, we win."
Institutions such as the Insurance Fraud Bureau (IFB), Insurance Fraud Taskforce (IFT) and National Fraud Authority (NFA) provide an essential platform for aggregating evidence of fraud from multiple insurers in an effort to support law enforcement investigations and prosecutions. While that has proven effective, it's a lengthy process, during which fraudsters can continue to cheat companies and consumers.
Fortunately, fraud professionals are a persistent, creative group.
Take for example the AA Insurance’s Stephanie Driscoll, Fraud Operations Manager, and Chris Monk, Head of Fraud and Collections.
Earlier, these two noticed suspicious, consistent behavior among a small number of motor insurance applicants, but they couldn't tie anything to fraud on the AA’s books. Instead of shrugging it off, Stephanie and Chris reached out to their peers on iovation's Fraud Force Community.
Because of iovation's unique, indelible device IDs, Stephanie and Chris could collaborate with peers at other companies the devices behind the questionable behavior.
Consumers’ private information remained private. Perhaps more importantly, there was never any doubt that the provisional collaborators were discussing the exact same devices.
That discussion in the Fraud Force Community pieced together a ‘ghost broking’ ring. The fraudsters were taking the AA’s cancellation letters to other insurers for a lower premium. The cheaper policies – their premiums lowered further with false information about the drivers – were then sold to unsuspecting victims.
The collaboration produced evidence that contributed to the prosecution of an entire fraud ring. It's an inspiring case study. Read it here.
When competitors unite against fraud.
“iovation’s device intelligence and Fraud Force community gives us a remarkable opportunity to discuss fraud rings and how to combat them,” says Stephanie.
Chris adds: “Without that candid, productive dialogue in the Fraud Force Community, we might not have uncovered the full extent of the scam. iovation was key in linking many seemingly unrelated moving parts.”
This collaborative spirit has emerged from several years’ worth of successful fights against fraudsters. When Chris and Stephanie began using iovation, the results of an impressive Proof of Concept phase overshadowed the prospect of collaboration.
“During the PoC, iovation enabled us to identify a staged-claim scam,” Chris explains. “This group had started with 100 quotations, all of which looked different. Thirty-two of these converted to policies. Nine devices were involved. It was only by linking the quotations to the other devices with iovation that we were able to recognize these as components of one larger scam. This discovery saved our insurers £298,000 worth of claims over a very short period of time.”
After becoming regular users of iovation, Chris and Stephanie quickly understood the value of collaborating with peers at other insurers.
“That's why we encourage sharing regularly and having quarterly meetings with other iovation users,” says Chris. “To be honest, you are going to miss a trick if you're not part of that.”
As more success stories of collaboration between insurers come to light, we hope the IFT's finding will gain traction: “Data sharing is vital in the fight against fraud … Better quantity and quality of data would make fraud easier to detect at every stage of the process, from application to claim.”