Other components of this series:
Technology can assist insurers streamline the consumer experience—however it also opens the door to new styles of fraud. Matthew Smith, The Coalition Against Insurance Fraud, on what need to be in an insurer’s fraud detection toolkit.
Highlights
- Technology like the Internet of Things, and in particular connected home and vehicle, are enabling investigators to recreate a person’s digital course—and in aggregate with big data, to create a virtual mosaic that may gas insurers’ fraud investigations.
- At the same time, customer rights to privacy and cyber protection are paramount, and insurers need to perform within felony and regulatory limits, in addition to ethical and moral limitations.
- An effective anti-fraud plan encompasses all elements of the coverage agency, now not just the claims characteristic—and is especially critical as insurers try to offer faster, more seamless client stories.
- Insurers ought to embrace new technologies to protect their organization and its policyholders, as well establish the ethics, morals and satisfactory practices for a way the ones technologies could be used.
How technology has modified fraud, with Matthew Smith
Matthew Smith is the director of presidency affairs and widespread counsel for the Coalition Against Insurance Fraud. He also has nearly 3 a long time of enjoy in coverage law.
In our previous episode, Matthew talked about the demographics of who commits insurance fraud—and the sudden motives why they do it. In this episode of the Accenture Insurance Influencers podcast, he shares how era is supporting insurers fight fraud—and how concurrently, the fashion towards frictionless purchaser experiences is opening the door to new types of insurance fraud. Finally, he gives steering for insurers looking to shore up their fraud detection toolkits.
The following transcript has been edited for duration and clarity.
Earlier, we mentioned how fraud has shifted over time, and one of the adjustments was technology and the capability of insurers to use it to higher look at and fight fraud. I recognize that you’re a chunk of a pioneer in that recognize, significantly using facts from cellular telephone towers to collect proof for insurance fraud instances, in addition to the use of social media searches. Why are trends like this vital for the fraud detection enterprise?
They’re extraordinarily vital. I think that we’re on the tip of the iceberg right now in phrases of where generation is going to lead us over the following decade or probably two a long time. As I alluded to in advance, the era we have already got in vicinity these days might have been Star Wars generation, even lower back inside the 1980s and early Nineteen Nineties.
There’s a program I even have the privilege of teaching and it’s known as, “Where’s Waldo and what’s he up to?” In that program, we’re in a position to expose fraud investigators and people inquisitive about insurance fraud that all of us leave a virtual route in the back of us. That path lets in an investigator to go in and recognize exactly where we have been and what we were doing the previous day.
We can cross back and we are able to construct a version. GPS, loyalty cards, whilst humans stop at a bank and take money out of an ATM, whilst people go through a toll plaza and use a toll reader, or while human beings move into their commercial enterprise and experiment in with an employee ID, that leaves a virtual footprint.
We have the capacity to use those digital footprints to move lower back and verify whether someone’s timeline—of in which they are saying they were, what they say they were doing—fits up with what they are affirming, and the proof regarding the claim.
Then you couple that with the capacity to scrape data or pull facts. We can determine who a person communicated with, wherein they made purchases, while those purchases were made, and put all of that together into a digital mosaic––it lets in us to have lots extra ability to correctly decide where a person was, what they had been involved in and whether or no longer they may were concerned in committing the coverage fraud.
That’s captivating and additionally from a private angle, barely daunting to be residing at a time when you create that digital footprint simply via your ordinary actions. And then we’re searching at some thing just like the Internet of Things and related vehicles and wearables. How do those play into the communique?
You understand, the Internet of Things is going to absolutely be charming as we see this unfold. But allow me come up with a real-lifestyles instance already of wherein it's far becoming fact. Today we've already refrigerators, washers and dryers which have Internet connections. So believe the potential, while that device in your private home is sending continuously information, speaking with different devices on the Internet of Things.
For instance, you allege that you had been not home the day gone by among midday and 4:00 p.M. Whilst the fire happened. By pulling the records, we are able to discover that at 2:14 p.M., a person opened and closed the refrigerator door. We can find out that at 3:15 p.M., a load of laundry became began. So all of these portions that move into the Internet of Things, from Alexa to all of the smart domestic devices, all create a digital path.
There had been several fascinating instances. One became a murder case in Arkansas where they had been subpoenaing the information of the Alexa tool to see what Alexa may additionally have heard main up to the time of the murder. Now that become a criminal case, no longer an insurance fraud case, but relaxation assured the ones are the cutting-edge instances which are going to take us into the future of what insurance fraud investigators will or will not be capable of advantage access to.
Wow. And where does purchaser privacy suit into all of this?
If you cross returned to what I said at the begin, the Coalition become formed 25 years ago by means of purchaser advocates and insurers. Now we’re in a brave new global as we examine the Internet of Things, as we study all the technology that we’ve mentioned. But that must be balanced with protecting customers’ rights of privateness and cyber protection.
Insurers have to investigate insurance fraud, however achieve this inside a completely sturdy parameter of what the coverage of insurance lets in, what their state rules and nation legal guidelines allow them to do, and what the moral and ethical obstacles are—as we as a society move into this new international of era, the Internet of Things, and the ability to have plenty greater in-intensity research of our private lives.
So one of the real missions now of the Coalition, is to ensure that we and our members are at the vanguard of now not only recognizing and the use of these new technologies to fight fraud, however that we are equally the sturdy voice in main the decision to make sure it is done in pleasant practices––and make sure it's far usually executed with the utmost of ethical and moral protection of the consumer. And we need to hold that at the forefront.
Definitely and an great point. Now, I’m curious about the extent of technology that we’ve talked about today. Is that generally used by insurers to locate fraud? Or are they the usage of extra antique-school strategies?
I think we’re in a duration of transition and I don’t recognize that we are able to quantify and say it’s 60/40, 70/30.
One of the research that the Coalition does each few years is a technology observe as well, and what we are seeing is that greater insurers are using generation to identify fraud. They’re beginning to use synthetic intelligence. They’re the usage of predictive modeling with the intention to have a look at and examine, not most effective an coverage declare after it happens, but also in the underwriting segment to try to prevent insurance fraud from ever occurring. By the use of the ones new, emerging technology for higher underwriting practices that do consist of anti-fraud additives.
So I suppose you're seeing insurers starting, more and more, to integrate those new technologies into their underwriting, their claims and their fraud combating systems. But it’s going to be a gradual transition going over the subsequent decade in advance, at the least.
Right. And numerous what we’ve talked about, and I suppose what a lot of people consider after they think about insurance fraud, is claims fraud. It sounds to me like there’s a push for fraud detection to transport in advance into the coverage cycle—to point of underwriting or maybe factor of quote.
Absolutely, at all stages. And that’s one of things we do endorse, is that a real anti-fraud plan has to encompass all aspects of any insurance business enterprise. You ought to take a look at your agent network, you need to take a look at inner fraud in the business enterprise, you need to look at underwriting fraud. Is that character who is securing that coverage a real individual or is it an avatar for a person else? Or is it a stolen identity of someone that is being utilized to buy that policy?
When we get into the declare section, if it’s a third-party claim, we need to research once more. Is that the real claimant that become concerned in that twist of fate or that incident? Are they fronting for a person else? Do we've dependable and accurate data or have those been falsified? On first-party claims the identical factors apply. So it’s all factors of the insurance manner that we look at.
I assume we’re at a very curious junction right now, in which many insurers are making the shift to end up extra customer-centric. So we’ve mentioned the use of cell phones and there’s this push to make the insurance revel in as frictionless as possible, as rapid as feasible. What does that suggest for fraud detection, if specifically you’re not managing someone face to face?
It’s very exciting due to the fact we’re in an technology proper now wherein we've higher capability than we have had, at any point in records, to analyze coverage fraud. But on the opposite facet of the equation, what you just stated is precisely proper.
We’re in a global of insurance right now that is becoming so patron-centric, in particular with the dramatic rise of millennials stepping into the insurance marketplace, and peer-to-peer coverage, in which literally the whole insurance process, from utility to underwriting to claims to claims payment, is achieved on a smart device. We are transferring so swiftly to method claims.
If you examine Lemonade, as an example, they boast that they have paid a declare in three seconds. And that’s all completed with synthetic intelligence. Now they may declare they've algorithms constructed in and programs constructed in. But as different providers pass closer to now not using human interaction, however the usage of artificial intelligence and seeking to reduce down on the processing time of claims, we're going to have new opportunities for fraud.
There’s an advert being run proper now via a chief coverage corporation, and it says, “If you could do this…” and it suggests someone taking a selfie, “then you may submit your coverage declare.” So we’re inviting people now to not have a person exit and check out a automobile after it’s been worried in an coincidence, however simply upload photos of that car. Well, do we know for a fact that’s the vehicle that was involved in the accident?
Or even if it were, right here are severa websites that can help you regulate photographs to make it seem like a perfectly great automobile has been worried in a crash. So how we address the ones emerging tendencies of insurers wanting to be so fast in looking after the purchaser, and balancing that with the potential that human beings must devote excessive-tech fraud, goes to be very a great deal of a venture for enterprise inside the rising years.
Those sound like a few large problems arising from what is probably a need to replace the coverage industry and its tactics. So as insurers appearance to shore up their fraud detection toolkits—and we’ve pointed out such a lot of various things that they have got at their disposal these days—what must they be focusing on to be able to set themselves up for achievement for the following five to ten years? What needs to be in that toolkit?
The primary issue they want of their toolkit is to embrace the new technologies which can be out there to protect not most effective the corporation, however greater importantly to shield the organization’s policyholders who positioned their accept as true with within the organisation. But similarly in that toolbox, you’ve were given to put in there ethics, morals, exceptional practices, and written regulations and processes on how these new technologies are going to be used. Things like: who has get admission to to this facts, how will the facts be used, how do we proportion it with policyholders, what statistics we are going to require them to give to us in the occasion that they make a claim? So that the whole thing is disclosed in advance very fairly, very definitely and we recognize the parameters of how we’re going to apply these new technology.
When we communicate with our provider members, we communicate to insurers about the want to include the new technology which are there. Use them to shield your policyholders and your agency, but make certain at the vanguard of everything you do, you are main with strong moral and ethical pointers—and speaking on your policyholders what you’re doing and how you’re going to be using this new facts that is rising, and that we're amassing and using to fight insurance fraud.
Matthew, thank you so much for taking the time to speak to us today.
Thank you. It’s been my privilege, my honor to be part of the podcast.
Summary
In this episode of the Accenture Insurance Influencers podcast, we pointed out:
- The digital route that human beings go away in these days’s linked world. In combination with information, it can allow investigators to create a virtual mosaic to better detect fraud.
- Advancing technology and statistics must be used responsibly, with client privacy, records ethics and cyber protection at their middle.
- Anti-fraud efforts go a long way past the point of claim; they have to encompass all aspects of the coverage business enterprise.
- As insurers prepare for a digitally driven destiny, they need to embrace new technologies to improve their fraud detection abilities—and comprise ethics, morals and first-rate practices to be obvious about how the ones technologies could be used.
For more steerage on a digitally pushed destiny of fraud detection:
- Check out Accenture Technology Vision for Insurance 2019.
- Learn ten steps to enhancing facts transparency.
- Read approximately the country of cyber resilience in insurance.
That wraps up our conversation with Matthew Smith. In weeks, we’ll speak with Eric Joost from Willis Towers Watson about the evolving role of the dealer, and why customer-centricity and danger management pass hand in hand. Until then, you can capture up with preceding episodes of the Accenture Insurance Influencers podcast. We spoke to Ryan Stein about how self-driving motors are challenging these days’s coverage guidelines and Lex Sokolin about how synthetic intelligence ought to exchange insurance.
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