Technology has forever changed how insurers interact with their customers. However, this is not always to the benefit of both parties. With increased online interactions (i.e. quotes, claim submissions, payments, etc.) came a rise in fraud. While banks and retailers have taken the lion’s share of negative press, the auto insurance industry is just as susceptible to cybercrime and fraud.
However, not all fraud affects the auto insurance industry in the same ways. For example, customers commit soft fraud such as lying about how many miles they drive per year or where they store their car. This affects an insurer’s ability to provide accurate quotes. Digital fraud poses a much bigger risk, as it is more likely to affect an insurer’s bottom line. To make matters worse, according to the Coalition Against Insurance Fraud, fraud is mounting. More than 60% of auto insurers confirmed a dramatic increase in fraudulent cases over the past three years.
Balancing Customer Satisfaction with Fraud Protection
Insurance customers, millennials in particular, want seamless interactions with their insurance provider. They also want a variety of communication methods including emails, texts, websites, and online apps. They also want rapid claims resolution so they can receive their money as soon as possible. While this is exceptional for the customer experience, it leaves significant opportunities for cyber criminals to abuse. Solid digital fraud prevention software can help flag common markers of fraud, but that only goes so far.
The greatest challenge facing insurers dealing with fraud is a lack of IT support. Fraud detection software can trigger several false positives, and not every agency has the workforce to sift through which are legitimate and which are fraudulent. As a result, insurers across the nation are increasing their IT budgets to balance the need for superior customer experiences with fraud detection and prevention.
First Notice of Loss (FNOL) represents the greatest opportunity to identify fraud, but not all agencies are utilizing it to its full potential. Fraud investigators rely on claims triaging to notify them of potentially fraudulent claims. However, without a robust trove of data, many adjusters rely on their instincts to forward on potential fraud cases. Improved technology can revamp the claims triaging process to use current and historical data to identify fraud with greater accuracy. This also helps expedite legitimate claims so customers are not held up waiting for payment because of a false positive.
Fraud is not going to stop anytime soon so insurers need to develop strategies to manage it now. To learn more about identifying and reducing fraud risks, contact the experts at Actec today.