Tackling insurance fraud in the pandemic

Authored by Allianz Fraud Manager James Burge

The Covid-19 pandemic is affecting just about every aspect of our lives, with the activities of the insurance sector no exception. There are some positives, with lockdown resulting in fewer accidents on our roads and burglaries in our homes, but tough economic times invariably mean an uptick in insurance fraud.

Alongside more opportunistic fraud, such as policyholders faking claims or exaggerating the nature of a loss, we might expect to see an increase in liability and casualty fraud as businesses come under greater stress.

There are also concerns about organised fraud, although the UK’s empty roads have made crash for cash scams much more difficult to stage. Unfortunately, there’s already evidence that the fraudsters are shifting their operations, with the latest scams, using hooks such as government payments and fines for breaking lockdown rules to exploit fears about Covid-19. There have also been reports of criminals knocking on doors with offers of help with shopping or prescriptions as a means to target the elderly and vulnerable.

The shift to home working is also feeding the fraudsters. Internet security may not be as robust on a home connection and, with working conditions so different, a phishing email can seem so much more plausible.

Conditions are perfect for ghost brokers too. With money tight, consumers are more likely to fall for their ‘too-cheap-to-be-true’ products. These fraudsters are also looking to exploit fears around Covid-19, flogging bogus travel and business interruption products that claim to cover the virus. Similarly, the industry has also seen instances of criminals impersonating insurers and offering to reinstate ‘cancelled’ cover, for a fee.

Policyholders can also find themselves being impersonated. Account takeovers, where a fraudster pretends to be the claimant and changes their bank account details to redirect a settlement to their own account, are an emerging trend.

This shift in the type and volume of fraud is challenging for the insurance sector. In these tough times, it’s even more important to ensure our genuine customers’ claims are settled as quickly as possible. Alongside this, it’s also essential to keep a tight control on fraud.

Data is a valuable tool when it comes to striking this balance. Simple data checks can validate the policyholder’s identity and weed out those that might need further investigation. Safeguards are also in place to prevent account takeover, with a series of validation checks run behind the scenes whenever a customer requests a change of bank account.

Collaboration is also helping us beat the fraudsters. By working together through bodies such as the Insurance Fraud Bureau, we’re able to identify the cheats and protect genuine policyholders. Sharing intelligence will ensure that we learn from each other and are able to close down any new rackets quickly and efficiently.

There are also valuable lessons to be learnt from insurers in other countries. For instance, Allianz Group shares emerging threats and best practice on fraud with other members in its network. Through this, the experiences of Spain and Italy, both of which are further along the curve with the virus, have proved to be particularly valuable.

As well as sharing intelligence within the industry, it’s also essential to raise awareness of fraud with the public. Alerting them to the risks and the types of fraud they might encounter, will help prevent them falling victim to a scam or ghost broker.

The unprecedented nature of the Covid-19 pandemic means these are challenging times for insurers and their policyholders but, by working together and sharing intelligence, the insurance industry will guarantee it’s even more challenging for the fraudsters.