'People, analytics & partnerships' are key to fighting fraud, Travelers reports
A recent panel of scam-fighting experts detailed the role agents and brokers play in stopping insurance fraud.
In the summer of 2022, the Coalition Against Insurance Fraud teamed with Colorado State University Global to study fraud in the U.S. and found that each year the country’s consumers and businesses lose more than $308 billion as a result of insurance schemes. Previous estimates had pegged the annual cost of insurance fraud at $45 billion.
“When we unveiled that figure to our members, their jaws absolutely dropped, because no one anticipated that number to be $308.6 billion annually,” said Michelle Rafeld, executive director of the Coalition Against Insurance Fraud. “And the scary thing is that number continues to increase with each passing year.”
Rafeld, who joined a recent Travelers Indemnity Company “Wednesday with Woodward” session, explained that insurance fraud is a complex, constantly evolving field. This makes it vital that insurance organizations unite to fight back against fraudsters.
People, analytics, partnerships
Pranay Mittal, vice president of investigative services at Travelers, said that Travelers thinks about its fight against insurance fraud in three broad buckets of people, analytics and partnerships.
“At Travelers, we fight fraud across all organizations, underwriting as well as in claims,” Mittal said. “All our employees are trained and are aware of insurance fraud and know how to get these suspicious policies and claims to our SIU.”
This training is a critical component of the people bucket. The other side of the people equation is having specialists that can help investigate potentially fraudulent activity, whether it be recovering stolen cargo, determining the origins of a fire or surveillance.
According to Mittal, fraudsters are increasingly using technology to create fake documents, photos and videos, while also leveraging identity theft to further insurance-related crimes.
Fraudsters are increasingly relying technology to ply their trade, but so are fraud fighters. These advanced tools include predictive models, artificial intelligence and other data-driven methods that can identify claims that need more attention, Mittal said.
AI and analytic tools are also helping fraud fighters detect more sophisticated fake documents, videos and photos. Additionally, AI and machine learning are also speeding up the investigation process by quickly sorting through troves of data to surface the most important details.
“Carriers can now use telematics and even IoT (Internet of Things) devices to collect real-time data on driving behaviors, on property conditions and environmental factors,” Mittal added. “All of this helps us better assess risk and also detect fraudulent claims related to staged accidents, property damage or theft.”
When it comes to partnerships, Mittal said industry collaboration and working with groups such as the Coalition Against Insurance Fraud and the National Insurance Crime Bureau is one of the strongest tools in the fight against insurance fraud.
“We work with many different industry fraud fighting groups to ensure we are aware of all these fraudsters that may be out there in the marketplace that have a history of fraud,” Mittal said. “Our people leverage the trainings and the fraud alerts.”
The role of agents & brokers
In the fight against insurance fraud, agents and brokers also have an important part to play, according to Rafeld, who noted they often serve as the first line of defense in the detection of insurance fraud.
“Especially when someone calls to make a claim or comes in wanting to take out a policy and some red flags go up,” she said. “I have always personally encouraged agents to listen to their gut instinct when that red flag does come up or they get that feeling that something just isn’t right.”
Rafeld said that agents in those situations should ask questions and document information that might later become useful for investigators. Agents and brokers should also be quick to report any suspected fraud to the appropriate authorities or their carrier partners.
Agents and brokers also have a vital role to play in educating policyholders about the true cost of fraud and how those losses result in higher premiums.
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