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    The Problem of Insurance Fraud

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    ADEDEJI MICHEAL
    Insurance fraud costs billions per year globally. It involves deliberately deceiving insurance companies or policyholders for financial gain, such as by exaggerating claims, staging accidents, or making claims for unoccurred losses. Common types of fraud include internal fraud by insurance company employees and external fraud by agents, intermediaries, or customers. New technologies using machine learning and devices like dash cams can help detect anomalies and reduce fraud, though it remains a significant problem for the insurance industry.

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    The Problem of Insurance Fraud

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    ADEDEJI MICHEAL
    58 views10 pages
    Insurance fraud costs billions per year globally. It involves deliberately deceiving insurance companies or policyholders for financial gain, such as by exaggerating claims, staging accidents, or making claims for unoccurred losses. Common types of fraud include internal fraud by insurance company employees and external fraud by agents, intermediaries, or customers. New technologies using machine learning and devices like dash cams can help detect anomalies and reduce fraud, though it remains a significant problem for the insurance industry.

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    THE PROBLEM OF INSURANCE FRAUD

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    Insurance fraud costs billions per year globally. It involves deliberately deceiving insurance companies or policyholders for financial gain, such as by exaggerating claims, staging accidents, or making claims for unoccurred losses. Common types of fraud include internal fraud by insurance company employees and external fraud by agents, intermediaries, or customers. New technologies using machine learning and devices like dash cams can help detect anomalies and reduce fraud, though it remains a significant problem for the insurance industry.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    58 views10 pages

    The Problem of Insurance Fraud

    Uploaded by

    ADEDEJI MICHEAL
    Insurance fraud costs billions per year globally. It involves deliberately deceiving insurance companies or policyholders for financial gain, such as by exaggerating claims, staging accidents, or making claims for unoccurred losses. Common types of fraud include internal fraud by insurance company employees and external fraud by agents, intermediaries, or customers. New technologies using machine learning and devices like dash cams can help detect anomalies and reduce fraud, though it remains a significant problem for the insurance industry.

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    THE PROBLEM OF INSURANCE FRAUD

    MICHEAL ADEYEMI ADEDEJI


    August 7, 2021. B.Sc, ACA(Professional).
    WHAT IS INSURANCE FRAUD?

    Firstly, what is Fraud?


    Fraud is the crime of using dishonest methods to take something valuable
    from another person. (According to Merriam Webster)
    Insurance fraud is a deliberate deception perpetrated against or by an
    insurance company or agent for the purpose of financial gain. Fraud may be
    committed at different points in the transaction by applicants, policyholders,
    third-party claimants, or professionals who provide services to claimants.
    Insurance agents and company employees may also commit insurance
    fraud.
    Common frauds include “padding,” or inflating claims; facts
    misrepresentation on an insurance application; submitting claims for injuries
    or damage that never occurred; and staging accidents.
    FRAUD STATISTICS AND COST OF
    INSURANCE FRAUD.
     The FBI estimates that the total cost of insurance fraud (excluding
    health insurance) is more than $40 billion per year. Insurance
    fraud costs the average U.S. family between $400 and $700 per
    year.
     Insurance fraud costs Canadian insurers an estimated $1.3 billion
    (cdn.) each year.
     South African short-term insurance industry lost almost R7 billion
    to fraud in 2019 according to SA Insurance Crime Bureau.
     In 2020, insurance fraud cost policyholders and insurers around
    $739 million in New Zealand according to IFB.
    TYPES OF INSURANCE FRAUD

    Internal Fraud Intermediary Fraud Customer Fraud

    Definition This means fraud against the This means fraud against the This means fraud against
    insurer by its Director, Manager or insurer or policy holders by an the insurer in the purchase
    any other officer, staff member. agent or any other third-party or execution of an
    administrator. insurance product.

    Examples • Misappropriating funds. • Non-disclosure or Soft Fraud:


    • Fraudulent financial reporting. misrepresentation of risk to • Exaggerating
    • Forging signatures and reduce premiums. damages/loss.
    stealing money from • Commission fraud – Insuring • Deliberate or subtle
    customers’ accounts. non- existent policy holders lagging of claims
    while paying premium to resolution.
    the insurer.
    Hard Fraud:
    • Staging the
    occurrence of
    incidents.
    • Medical claims
    fraud.
    COMMON STAGED CAR ACCIDENTS

    1. Swoop and Squat


    2. Drive Down
    3. Sideswipe
    TACKLING INSURANCE FRAUD
    HOW TECHNOLOGY CAN HELP TO PREVENT
    INSURANCE FRAUD

    • Health and auto insurance frauds are the most popular in the insurance industry and in
    Africa, health and auto insurance are the most available types of insurance.

    • Artificial intelligence and machine learning technologies are developments that many insurers
    are leaning towards to help solve this problem. In the health insurance space, a popular form
    of machine learning applied is called Anomaly Detection. For example, when a claim is
    submitted by a policyholder for a particular procedure done, with anomaly detection, the
    system can tell when there are inconsistencies that are typically not associated with the
    specific procedure being done, thereby reducing the likelihood of the insurer being overbilled.

    • Auto-insurance fraud is a little more complicated, and thus, a lot more technology is invested
    into hardware, like dash cams, and telematics devices. To curb the rate of false claims and
    inflated claims from vehicle owners, some insurers give significant discounts to policyholders
    who opt-in to use such devices.

    • With Auto and Health insurance being the most available types of insurance in Africa, the low
    insurance penetration could be considered a diamond in the rough as it gives more insurers
    the possibility to establish less flawed technologically driven products, services, and
    processes as the market for insurance continues to grow.
    CONCLUSION

    In colossal, insurance fraud is a problem that current


    approaches and tools aren’t effectively tackling.
    It is becoming an increasingly bigger issue that impacts an
    insurance company’s profitability and ability to stay
    competitive.
    As a result, insurance companies need to embrace innovative
    technologies that discover and effectively deal with fraud like
    the use of Artificial Intelligence.
    QUESTIONS?
    THANK YOU!

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