Insurance professionals’ suspicions about fraudulent claims have increased during the pandemic as fraudsters have become more creative, according to a recent survey.
The survey by FRISS, a provider of fraud and risk detection solutions for property/casualty insurers, found that its 420 respondents in 2022 believe 20 percent of claims filed might contain fraud. That’s up from 18 percent in 2020.
“Innovation and digitization are disrupting the insurance industry in good ways, setting a new norm that’s enabling the industry to be even more responsive to customers’ needs,” said Triple-I CEO Sean Kevelighan in an introduction to the report. “Unfortunately, the acceleration of digital processes that began well before the pandemic also provides opportunities for fraud.”
In 2022, the top challenge reported by respondents was “Keeping up with fraudsters’ modus operandi” – a change from both the 2020 and 2018 surveys, in which “Internal data quality” was deemed the biggest challenge.
Insurance fraud costs U.S. consumers at least $80 billion every year, according to the Coalition Against Insurance Fraud. The FBI says the cost of non-health insurance fraud hovers at about $40 billion a year. As a result, the average U.S. family incurs between $400 and $700 per year in losses due to increased premiums.
Respondents to the survey say fraud detection software has proven to be generally effective. This includes improving loss ratio (59 percent), staying ahead of developing fraud schemes (53 percent), and increasing investigator efficiency (52 percent).
By Max Dorfman
Originally posted on Insurance Information Institute