New Research on Looming Threat of Global Insurance Raises Alarms
WASHINGTON, Nov. 15, 2021 /PRNewswire/ -- Nearly 60% of those tasked with thwarting the multi-billion dollar threat posed by global crime rings are not yet up to the task, reports a new Globalization of Insurance Fraud Study by the Coalition Against Insurance Fraud on Monday. The study was conducted in partnership with IBM and Luxoft. The study surveyed financial crimes experts, data security analysts, government regulators, insurance professionals and others to better understand how anti-fraud experts from around the world are dealing with international fraud rings. The research found that fraud fighters –– professionals tasked with investigating and prosecuting insurance fraud –– in North America were the least prepared for threats from abroad.
"Organized rings, both foreign and domestic, are stealing billions," Coalition Co-Chair David Riouxof Erie Insurance said. "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. These are all attacks that can be launched from anywhere in the world with a decent internet connection."
Key Takeaways from the Research:
Fraud fighters must prepare in the present to fight globalized fraud in the future Globalized insurance fraud is not a priority at all for 27.7% of respondents and a low-to-medium priority for 57.5% of respondents, leading to a lack of resources and time invested in day-to-day operations fighting global insurance fraud. Respondents from North America assign a lower priority for global fraud reflecting a smaller number of companies that underwrite global insurance lines.
Recent attacks make the threat of global insurance fraud hard to ignore Technological advances, recent attacks by individuals and groups in the news–– as well as the onslaught of cyber crimes could increase the overall level of concern. Nearly half (48.5%) of respondents say they are either "very concerned" or "extremely concerned" about the future threat of global insurance fraud.
Deeper investments in anti-fraud technology and staffing are needed to keep pace with the threat of global insurance scammers. Most fraud fighters (56.8%) said they do not have dedicated resources or a fraud department specialized in dealing with globalized fraud–– especially in North America. The EU/UK were more likely to have dedicated internal resources to fight global fraud. More than half of respondents said technology was either a component (41.3%) or the primary method (11.06%) by which their organization identifies, tracks, and responds to global fraud. The study found that organizations that have both a program and dedicated resources use technology more often.
The study surveyed fraud fighters living in 33 countries across North America, the Middle East, Europe, Asia, and Africa. The Globalization Study was released to an international audience at the Global Insurance Fraud Summit as the keynote address during International Fraud Awareness Week. Analysis of the full Globalization of Insurance Fraud Study: New world, new challenges study is available online.
While there is no single estimate of the annual cost of insurance fraud around the world. An Insurance Europe report estimated there were €13 billion of fraudulent claims in the EU in 2017. The Insurance Information Institute found that fraud accounted for about 10% of the property/casualty (PC) insurance industry's incurred losses and loss adjustment expenses each year–– or $38 billion in 2020. The Coalition estimates U.S. insurers and consumers suffer $80 billion in fraud across all lines of insurance each year. The FBI believes this costs the average American family between $400 and $700 in increased premiums per year.
"The Globalization of Insurance Fraud Study is an excellent initiative to better understand the gap between threat and the preparedness of the insurance sector. As a coalition, we need to help our members face the new challenges of improving insurance fraud management in an increasingly digital and interconnected world," said Maxence Bizien, Executive Director of ALFA, a French non-profit professional organization dedicated to the improvement of insurance anti-fraud activities.
The survey also identified preparedness gaps in planning for coordinated fraud attacks from abroad. "There's a lack of confidence in the tools, resources and knowledge organizations have in place to combat globalized insurance fraud," reads one of the study's key findings. Less than half of the worldwide respondents felt even "Somewhat confident" their organizations are equipped to address global fraud as opposed to the 4% who are "Extremely confident" their team is prepared for the challenge ahead.
"The risk is real. The time to act is not tomorrow, but today," concludes the Globalization Study in an industry-wide call to action to: conduct more in-depth research on the globalization of insurance fraud; make deeper investments in A.I., data analytics, and emerging technology in the fraud detection space; promote knowledge sharing among fraud fighters; and to conduct threat analyses and develop internal plans and procedures to guard against global insurance fraud.
Formed in 1993, the Coalition Against Insurance Fraud is America's only anti-fraud alliance speaking for consumers, insurance companies, government agencies and others. Through its unique work, the Coalition empowers consumers to fight back, helps fraud fighters better detect this crime and deters more people from committing fraud.
IBM is a leading provider of Hybrid Cloud and A.I. For more information about IBM's insights and solutions for the global insurance industry, please visit www.ibm.com/insurance.
Luxoft is a leader in insurance technology and operations with next-generation solutions that serve every segment of the global insurance market.
For more information or further press inquiries please contact Arinze Ifekauche, Director of Communications at [email protected].