Senate Commerce, Science & Transportation Subcommittee Issues Testimony From Insurance Information Institute
"Chairman Moran, Ranking Member Blumenthal, and committee members. I appreciate the opportunity to address you today about the current issues facing the insurance industry and consumers when it comes to insurance fraud in America.
"My name is
"The I.I.I.'s members include the nation's largest auto, home, and business insurers. While much of our work focuses on property/casualty "(P/C)" insurers, nearly 70 percent of our members also offer life insurance solutions. Today I will focus on the insurance fraud trends P/C insurers are seeing, and how insurers and consumers can protect themselves against these crimes.
"In its role as the
"Insurance companies recognize the overwhelming majority of claims they receive are legitimate, and these claims are paid promptly.
"The relationship between insurers and consumers is one of trust. Consumers trust that insurers will help them re-build when catastrophe strikes, while the insurer trusts that the reported information provided by the consumer is honest. Unfortunately, whenever there is an incident of fraud it has damaging consequences for the consumer and insurance company alike. In fact, Deloitte estimated in a 2012 report that P/C insurers paid around
"In the five years since Deloitte released its insurance fraud study, insurers and the state insurance departments that regulate them have dramatically improved their fraud-fighting efforts. Insurers have allocated additional resources to their internal Special Investigations Units (SIUs) and expanded their training of claims adjusters to detect fraudulent activity. Moreover, nearly every state insurance department has an in-house fraud bureau. And they are getting results. For example, California Insurance Commissioner
"The
"Insurance fraud schemes are, however, always evolving and getting more sophisticated, especially as insurance transactions are increasingly conducted online. Consumers increasingly want to buy insurance policies from their mobile devices, and have their insurance claims paid solely on the basis of the photo they send electronically to their insurer.
"But how can insurers verify the identity of the mobile-device user, or the legitimacy of a property damage claim, without having the subject of the claim inspected personally by a claims representative?
"This is where the insurance industry's embrace of new technological innovations stemming from big data and artificial intelligence will help improve delivery of their services to the consumer and reduce costs. As we are seeing in so much of our lives, technology and digitalization in insurance can help bring benefits to society; in this case by rooting out unwanted fraud.
"In a report released last month, the
"As much as these emerging technologies make a positive impact, there will always be a human element to combatting fraud, and that is where the I.I.I. plays a role. Consumer education is at the core of what we do, whether it be through our website content, media relations efforts, or public speaking engagements.
"Like insurers, consumers must have the information needed to make prudent financial decisions and to protect themselves from fraudulent activities. The I.I.I. is proud of the role it has played in keeping consumers informed and vigilant about rogue contractors, staged auto accidents, and the criminals who want either to steal their insurance proceeds--or even their identity.
"Thank you again for the opportunity to speak before you today."
Senate Commerce, Science & Transportation Subcommittee Issues Testimony From Coalition Against Insurance Fraud
Get help navigating the state’s Health Benefit Exchange from local insurance company
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News