North American insurers could be underprepared for global fraud
A study by The Coalition reveals many professionals have little faith in their organizations’ power to recognize and combat organized fraud.
The Coalition Against Insurance Fraud recently released their Globalization of Insurance Fraud Study, which found that many insurance organizations may not be prepared to deal with the growing threat of global fraud rings.
The study was conducted in partnership with IBM and Luxoft. Researchers surveyed fraud-fighting pros across 33 countries in North America, Europe, Asia, Africa and the Middle East in an attempt to understand how these experts are handling organized international fraud.
Fraudulent claims can have a monumental financial impact, with the FBI estimating property and casualty insurance fraud costs over $40 billion per year. That translates to the average American family paying between $400-$700 more in annual premiums. The Coalition estimates there are $80 billion per year in losses due to fraud across all lines of insurance in the United States.
“We’ve seen organized scammers exploit the telehealth system, intercept personal information through phishing scams and other data-harvesting schemes, carry out ransomware attacks, and run a number of insurance scams using stolen or synthetic IDs off the dark web,” Coalition Co-Chair David Rioux of Erie Insurance said in a release. “These are all attacks that can be launched from anywhere in the world with a decent internet connection.”
Despite these looming threats, the Coalition’s research found that globalized insurance fraud is only a high priority for 14.9% of respondents. Nearly 28% said it was not a priority at all, and 57.5% said it was a low-to-medium priority, with the surveyed North American professionals assigning it a lower priority. However, 48.5% of respondents said they were either very or extremely concerned about the future threat of global insurance fraud.
According to the report, the most common type of organized fraud involved staged accidents in auto claims. North American professionals who were surveyed reported they experience the most organized fraud with property claims.
Fraud fighters surveyed stated a common issue was a lack of dedicated resources or fraud departments within their organizations, with 56.8% reporting they didn’t have those resources at all, and fewer than half saying they felt somewhat confident their organization was equipped to handle these threats. The Coalition reasons this displays a lack of resources and time being invested in this kind of fraud.
The Coalition’s study predicts insurance fraud will continue to increase with the expansion of technology and encourages organizations to make changes now to address this ever-growing problem; including conducting more in-depth research, improving awareness and training about globalized fraud, conducting internal threat and gap analyses in domestic companies, and educating legislators, regulators and others on the economic impact of global insurance fraud.
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