One-third of the respondents to FICO's Insurance Fraud Survey, which included responses from 260 insurers in the U.S. and Canada, feels "inadequately protected against fraud," the analytics software company said today.
Insurers are most anxious around premium leakage and new applications. Policyholders often underestimate or leave out information life annual auto mileage that should change the cost of their policy.
The survey also put an emphasis on claims fraud. About a third of the respondents said that claims fraud was as high as 20% of their total claims costs — and another 35% said it was up to 10%. More than half expect fraud-related losses to increase, especially in personal property, workers' compensation and auto insurance lines of business.
"Conventional industry wisdom has held that fraud losses average around 10 percent of claims volume, but according to our survey the actual number is significantly higher," said Russ Schreiber, vice president of the insurance and healthcare practice at FICO, in a statement. "With more people resorting to fraudulent activities, and fraud rings becoming more sophisticated, insurers must step up efforts to protect good customers, uncover organized fraud and improve the effectiveness of specialized investigative units."
Twenty percent of respondents identified predictive analytics as a useful took for stemming the tide of fraud. Other tactics identified included the use of anti-fraud teams for specific books of business, link analysis for detecting fraud, and business rules for stopping known fraud types.
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