Every insurance company in the world has grown up recognising different flavours of fraud but they are about to see a new kind of fraud wave rising in tandem with the economic effects of coronavirus.
The world's investment banks are highlighting the extreme liquidity pressures that big companies will face during the next 18 months. With these unprecedented pressures in the financial system, policy changes are following thick and fast to manage them through tax, regulatory and borrowing adjustments.
We live in a consumer driven economy, so insurers must expect changes to fraud patterns as ordinary consumers undergo alarming knock-on liquidity pressures in their own homes. We aren't talking which grade of foreign holiday but absolute essentials: food, utility payments and prescriptions.
Fraud managers often divide the population into a 10:80:10 model. 10% of customers will never, ever be tempted by fraud. 10% will always be tempted... and 80% could be tempted depending on how hard financial problems hit them. And we are about to see problems hit harder and wider than ever in the memory of anyone who did not live through the last World War.
To be clear, sympathy for individual circumstances can never cross over into acceptance of insurance fraud. The system only works if everyone plays fair and it is the most vulnerable who suffer with every supposedly 'lost Rolex' or stolen/damaged/ burnout car claim that slips through the net of detection. The aggregate of insurance premiums reflects the aggregate of insurance claims; no single fraud changes the aggregate but thousands push up premiums for everyone with the poorest affected most.
The most practical step for insurers in March 2020 is to recognise where fraud may seep through these new fissures in society and be ready to act calmly and - wherever possible - to give those circumstantially tempted by fraud graceful ways to escape. 360Globalnet's 360Siteview platform is usually configured with a 'withdraw claim' that sits alongside robust digital methods of designing-out fraud, particularly with use of live video which is impossible to edit unlike pictures downloaded from the internet! When customers feel the likelihood of detection increasing, as many as 30% choose to withdraw their opportunistic claim.
In 2020, the most responsible thing any insurer in the world can do is to focus on cost-reduction and efficiency enhancement through digital cloud-based systems that staff can access from anywhere if they need to. This focus increases settlement speed, reduces opportunistic fraud and ensures valid claims make it through the system quickly.
Customers have a responsibility to insurers but insurers have a bigger responsibility to their customers to ensure that genuine claims are paid fast and their claims systems are lean, fast, fit and digital enough to keep costs down while dealing with inevitably rising fraud.