Roland B. Woerner
Global Head of Counter Fraud GI Claims, Germany
1. What are the main areas in which insurance fraud (and fraud management practices) have been developing in recent years?
In recent years, fraud awareness has increased significantly. The insurance industry has understood that the losses which arise from fraud are huge and have a strong negative impact on the business operating profit. On the other hand, it became clear that a sophisticated fraud prevention improves the combined ratio by important 1 to 3 percentage points.
2. To what extent have new technologies been able to improve managing insurance fraud? Have they also allowed fraud to become prominent?
In addition to the traditional methods of fraud detection, such as training of claims handler and loss adjuster, more emphasis is placed on the technical support. The main objectives are to increase the fraud detection rate, to decrease the false positives and to streamline the claims processes. Meanwhile, most of the insurers have understood that without sophisticated automated fraud detection, in-depth data analysis and innovative software tools like meta-search engines, fraud fighting will continue to be costly and will be a fight with no reasonable chance to win.
3. How is fraud data processed and utilized in order to improve fraud prevention?
For the reasons I just mentioned, there needs to be a holistic view on overall claims data. We should see automated fraud detection as a claims process optimization service which increases operational effectiveness and decreases loss exposure and risk. The feedback/info-loop to risk management and underwriting must be an integral part of this. Data analytics is key to detect future fraud trends at an early stage.
4. How prominent has cross-border fraud been in the last few years? What are the most important aspects thereof?
Unfortunately, the criminals can defraud across borders without major problems. They operate freely organized and foreclosed across countries. Local law enforcement and local insurers are bound by local laws and are struggling to stop this phenomenon of international crime. Here, the insurance industry must cooperate much more among the organizations and accelerate the collaboration with European and international institutions such as Europol and Interpol. However, this is still a challenge and a long and stony road.