According to a recent report from the Association of British Insurers, 562,000 instances of insurance fraud were detected throughout 2017. The range of methods used to commit insurance fraud is becoming increasingly sophisticated, especially with the use of artificial intelligence which repeatedly presents new challenges for the insurance industry.
Traditional methods of insurance fraud remain frequent and opportunistic, such as 'crash-for-cash' and 'ghost brokers', which pose the greatest risk to more vulnerable groups including the young (e.g. students) and the elderly. The City of London Police National Fraud and Cyber Crime Centre revealed that ghost brokers contributed to GBP 164,993 of losses for 17-24-year-olds obtaining motor policies between November 2014 to July 2018. In fact, individuals in this age group are 197% more likely to fall victim to insurance fraud than 25-44-year-olds.
The use of artificial intelligence to commit insurance fraud is increasing, with new methods and access to software becoming more commonplace. More recently, the emergence of voice recording software has posed security risks to the industry, with criminals recording individuals voice over telephone systems and using software to replicate their speech to gain access to sensitive information and secure accounts. Products that allow this include Lyrebird and Adobe's Voco, which has garnered the title of 'photoshop for voice.'
With such a wide spectrum of risks, it is not surprising that the insurance industry is hesitant of how to offer cover, without exposing themselves to major losses. The risk is twofold for the insurance industry because they also must work to ensure that their own business processes, systems and data are not at risk of fraudulent activity and cybercrime.
With fraudsters taking advantage of technology to find weaknesses in the insurance industry, it's vital that you use technology to understand how this is taking place and how companies can protect themselves and their clients accordingly. Take advantage of our global data reports to help you achieve this goal.
IFB has seen a rise in the number of live investigations, as well as a more diverse range of fraudulent behaviours, as these criminals move to target new areas. Fraudsters are tenacious and regularly change their methods, moving between products, sectors and approaches. They will exploit any area they are able, and the industry faces a constant battle to stay one step ahead. "We don’t underestimate the challenge we face; insurance fraud is an issue that the industry takes very seriously and has been investing heavily in combatting in recent years. These results are encouraging and demonstrate to the would-be fraudster that the insurance industry is a hostile environment and every effort is being made to catch and stop them."