Responding to insurance fraud in the wake of COVID-19
Negative perceptions of the insurance industry are buoying claims fraud.
Whenever there is a downturn in the economy, fraud risks seem to increase as insurers are viewed as having deep pockets capable of paying for whatever damages policyholders suffer.
These days, the coronavirus pandemic has left many people in desperate times, with businesses furloughing staff or closing completely. Insurance fraud, including workers’ compensation and property and casualty claims, are on the rise.
To combat the increase, as well as the challenge of conducting insurance adjustment and claims processing in a remote work setting, insurers have found themselves rapidly implementing InsurTech solutions. As the industry pivots to acclimate to unprecedented changes, it helps to better understand how technology can help combat deceitful claims.
COVID-19: A new landscape
Many insurers are experiencing high volumes of business interruption claims as well as those that arise from automobile injury accidents and personal property theft.
For automobile insurance providers, “jump in” and staged accidents are on the rise.
At the height of the pandemic, police departments were responding to fewer car accidents unless there was an injury. This allowed unrelated individuals to cite physical damage after the accident by claiming they were in the impacted car. Usually, due to lack of official reporting, there was inadequate photographic evidence captured to either prove or disprove the claim.
The same issues hold true for property claims. In a recent webinar, Matthew Smith, executive director of The Coalition Against Insurance Fraud, noted: “Spikes in claims surrounding damage to detached properties like sheds, separate garages and barns allow individuals to damage non-essential property and receive a quick financial gain to cover costs.” These claims are difficult to investigate and photograph as in-person visits are discouraged due to coronavirus.
The entire insurance industry had to quickly pivot from tried-and-true workflows that they have depended on for decades to a flexible virtual service model.
As the world comes to terms with the new challenges of COVID-19, there will be many lasting implications. Consumers will justify committing insurance fraud when they feel that they are not being treated fairly. If consumers determine that the insurance industry did not take care of small business owners, restaurants and other struggling institutions during the pandemic, their perception of insurance companies will change when looking at their own claims. They may begin inflating otherwise legitimate claims for fear of being taken advantage of during a desperate time. These new perception issues play a key role in determining fraud motivation and are therefore important to take into account.
The power of end-to-end automation
Insurers and other fraud-fighting organizations have come together to collectively push out anti-fraud information and make an effort to educate stakeholders. One way companies have succeeded in limiting fraud is through the implementation of field service management software (FSM).
FSM can completely automate warranty, property and casualty and other insurance claim processing through intelligent auditing systems. These algorithms use company specific-business logic and rules, making only valid claims eligible for payment.
InsurTech tools like FSM allow insurers to collect relevant claim data on a single dashboard, incorporating reporting and analytics to monitor business performance and KPIs relevant to identifying and combating fraud.
Although live evaluations of claims are difficult to conduct in a world of virtual communication and social distancing guidelines, FSM software can help adjusters collect the information they need by allowing claimants to upload photos of damages to consumer portals. When in-person investigations are possible, property and casualty insurance providers can expedite the overall process from first notice of loss (FNOL) by scheduling adjudicators to assess the scene. Operators can even schedule assessors to visit a customer’s home when no one is present to mitigate safety risk.
Tailoring the perfect customer experience is important during strenuous times and shows the value of service, decreasing the occurrence of customer fraud. While 86% of customers will quit doing business with a company due to a negative customer service experience, satisfied insurance customers are 80% more likely to renew their policies. By leveraging digital field service tools, insurers can reduce turnaround time and improve customer experience from FNOL to completion while increasing availability and productivity of adjusters through automation.
Stay secure
The only way to respond to pandemic-related increases in insurance fraud is to remain vigilant and avoid complacency with claims handling. This burden can be eased from insurers by integrating FSM software that checks claims against personalized business rules and flags ineligible claims before payment. A fully integrated, configurable claim management system can be used to optimize company reserves and protect the integrity of claims processing. Those who incorporate a unified, end-to-end FSM platform are better equipped to combat fraud, reduce claims process friction, optimize costs, and improve customer satisfaction.
In addition, insurance companies must consistently publicize their up-to-date anti-fraud proceedings across their channels to show consumers and defrauders alike that they have processes in place to handle deception and to discourage illicit actions during this desperate time. Awareness of the new fraud trends and methods to counteract them place insurers a step ahead in this changing landscape and will protect both the provider and the insured.
Samir Gulati was appointed Chief Marketing and Product Officer at ServicePower in 2017, where he is responsible for all aspects of Marketing and Product Management, including market strategy, product roadmaps, demand generation, product marketing, and corporate marketing. Samir brings over 25 years of experience in global product and marketing leadership roles in technology companies. This contributor can be reached by sending an email to info@servicepower.com.
These opinions are the author’s own.
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