The second Expertise Live event, held in association with Zurich, focused on fighting fraud in personal lines motor business.
The roundtable in London discussed how brokers and insurers can work better together to review data at the point of application and spot potential areas of fraud, with a particular focus on the misrepresentation of risks and organised criminal gangs.
The debate explored whether there were lessons to be learned from the direct channel and what the differing needs were of regional brokers who dealt exclusively with face-to-face business, versus those on aggregators and brokers with large call centre-based offerings.
The power of technology was widely covered and participants addressed the issue of whether brokers who failed to realise the severity of the situation could be in danger of losing their insurer agencies in the future for not taking the necessary fraud-fighting steps.
Where are the growth areas for fraud?
A Zurich representative admitted that the insurer was starting to see fraudulent cases come through regional accounts to a greater extent than it had originally anticipated.
“We always held a view that it was less prevalent in regional accounts,” they clarified. “That is probably still true but it is emerging faster.”
One broker highlighted that with five or six insurers using data enrichment the firm had seen fraudsters shifting their focus. Although the broker accepted that fraud had not been completely cut out they stated: “Those cases are shifting more to the insurers who are not on enrichment and they are picking those cases up.”
Attendees who still predominantly worked on face-to-face business where they knew the clients personally argued they were still not seeing such levels of fraud. “[Cases] come under more natural scrutiny,” they claimed.
One participant noted: “Fraud is like water on a pavement, it will find a way down. Fraudsters are not going to stop committing fraud because we have made their lives complicated.”
What are the major areas of fraud?
Almost all agreed that while direct writers were the first to fall victim to fraud online they had become better at protecting themselves. This in turn meant that brokers could end up finding they were next in the chain to receive the misfortune of fraudulent business.
All were at pains to stress there was a difference between those customers who genuinely forgot, for example, the month of a claim that had happened five years ago, and those actively mis-representing themselves.
A broker who had not previously seen much in the way of fraud said they had now noticed that, as accounts moved to a telephone-based service, they were “seeing more customers try to move their accident date or manipulate some of the data”.
On the question of how much was being mis-represented, the figures that in excess of 25% of online applications needed to be changed in some form, versus less than 10% offline, were widely cited.
What further technological advances will help?
The potential for the DVLA to be used by 2014 – although many expressed scepticism that such a timetable would be achieved – was described by one broker as potentially “a godsend”.
Another broker agreed that data from the DVLA will be “wonderful” but they also joked: “I can’t think of why it wouldn’t work but obviously there will be reasons!”
In particular, the brokers said they were keen to explore options that would prevent the duplication of effort. By working together to deliver more profitability there would be “a greater share for everyone at the end” they accepted.
And all were of one voice that fighting fraud was an important battle but, without being downbeat, it was not one that would ever be won. “Insurance fraud is not victimless, it is pushing up everyone’s costs,” said a Zurich participant. “We are not going to get to a point where we can say we are done. It is not going to go away, it is going to evolve.” And a broker agreed: “There isn’t a magic wand.”
Continuing the expanded Expertise Live series for 2013, brokers and Zurich attendees tackled key questions around fraud in motor business for a special video of the event. The experts shared their experiences on what they are seeing at the coalface and whether the levels of fraud are getting better or worse. Participants detailed what actions they felt brokers and insurers were taking to tackle fraud and what more could be done together. Finally, the panel gave its views on how technology could further help fight fraud in the future.
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