British Insurers Use GIS to Ramp Up Battle Against Fraud

Insurers are increasing the number of measures they are taking against fraudulent claims, according to new research by Ordnance Survey amongst the UK’s leading Insurance Fraud Investigators (IFI’s).

Fraudulent activity has moved up the organisational agenda for over half (56%) of IFI’s, while two in three (65%) have seen increased investment in fraud detection within their organisation. This investment has been spent primarily on human resources (61%), combined with fraud detection systems (51%) and supporting technology (43%).

Over the last year there has been an 88% increase in the number of insurance fraud investigators using geographic information to build up evidential cases for prosecution. Nearly half (47%) are now using it to help with prosecutions compared to 25% last year. Almost four in five (77%) IFIs are using geography in their current role to help with hot spot analysis, verify customer information and help detect fraud at claim and policy inception stages.

According to Sarah Adams, Insurance and Banking Sector Manager at Ordnance Survey: “Around half of insurance fraud investigators are now benefiting from the visualisation and story that maps provide to help build up evidential cases for prosecution; more and more recognise that they are using geographical data in different ways to support various ways of investigation.”

Fraudulent claims being fuelled by the economic climate continues to be the top concern for the next 12 months for nearly two thirds (66%) of IFIs. The problem continues to rise, as nearly four in five (79%) have seen an increase in fraudulent claims since the beginning of the year.

Motor insurance is the biggest area where fraudulent claims are being made, which have more than doubled since last year (72% in 2010 compared to 34% in 2009). Other areas where there has been an enormous jump in fraudulent claims include personal injury, with two in five investigators (43%) seeing an increase compared to no increase last year, as well as employee fraud, where 11% of IFIs have seen an increase compared to none in 2009. Fraudulent claims range from inflated and exaggerated claims (83%), to completely false claims (75%) and serial claimants. There has also been an increase in the volume of fraudulent claims as well as in the monetary value of claims made.

Stephen Teeling, Deputy Chairman of the Insurance Fraud Investigators Group (IFIG), says: “Levels of insurance fraud show no signs of abating but it’s encouraging to see that it also continues to rise up the organisational agenda. It’s clear from our members that increasingly, organisations are putting a fraud strategy in place and focusing on the fight against fraud. We’re getting better at detecting it, but there’s still a long way to go as it’s a problem that is unlikely to go away.”

Concern over MoJ reforms has risen by 78%, from 19% in 2009 to 34% of insurance fraud investigators citing this as an issue this year as the new regulations have come into force.

It has been suggested that the ‘have a go’ claim culture will increase substantially under the Jackson review’s proposed changes and that liability insurers will be inundated with claims. However, the majority of IFIs don’t believe it will have much impact on fraudulent claims with two in three (67%) of the opinion that the number of fraudulent claims will remain the same.

Insurance fraud investigators (79%) also believe that aggregators and brokers need to do more to prevent fraud at policy inception, including undertaking more stringent checks, undertaking identity checks when signing up customers and enabling better information sharing.