Fraud In­tel­li­gence Sys­tem: The Use of An­a­lyt­ics in Fraud De­tec­tion

Insurance - - OPEN COLUMN - Text Aaron Mor­ris & Jasvin­der Singh | ISM In­sur­ance Ser­vices Malaysia Ber­had

AS RIGHT­FULLY MEN­TIONED BY DATO’ SYED MO­HEEB IN HIS PRE­VI­OUS ar­ti­cle ti­tled “In­sur­ance Fraud? Who Cares?” the Malaysian in­sur­ance and Taka­ful in­dus­try is not op­ti­mis­ing the us­age of pre­dic­tive an­a­lyt­ics in their fight against fraud. Well, when it comes to fraud, fraud­sters can get cre­ative which makes it dif­fi­cult to de­tect due to the chang­ing be­hav­iour of the fraud­ster. In a nut­shell, in­sur­ance fraud can be cat­e­gorised into four types:

1. Claims Fraud - fraud com­mit­ted to ob­tain wrong­ful com­pen­sa­tion or ex­ag­ger­ated claims

2. Ap­pli­ca­tion Fraud - fraud com­mit­ted to ob­tain wrong­ful cov­er­age i.e. mis­rep­re­sents or de­lib­er­ately fails to dis­close ma­te­rial facts dur­ing the process of pur­chas­ing in­sur­ance.

3. In­ter­nal Fraud - this oc­curs when em­ploy­ees of in­sur­ance or­gan­i­sa­tion col­ludes with fraud­sters.

4. In­ter­me­di­ary Fraud - com­mit­ted by in­ter­me­di­aries against in­sur­ers.

Just by tak­ing a glance into more de­vel­oped mar­kets such as the United King­dom (UK), one can truly ap­pre­ci­ate the po­ten­tial of an­a­lyt­ics in pre­vent­ing and de­tect­ing fraud. For ex­am­ple, the UK has adopted sev­eral strate­gic mea­sures in their fight against fraud which in­clude:

1. Claims & Un­der­writ­ing Ex­change (CUE) - this plat­form was es­tab­lished in 1994 to as­sist in­sur­ers iden­tify nondis­clo­sures, con­cur­rent claims ac­tiv­ity and pre­vent fraud.

2. Mo­tor Anti-FrUD & tHEFT rEG­IS­TER (mi­aftr) - a cen­tral data­base which con­sist data of ve­hi­cles that has been writ­ten off and re­ported stolen.

3. In­sur­ance fraud Bereau (IFB) - this bureau was es­tab­lished in 2006 as a hub for shar­ing in­sur­ance fraud data and in­tel­li­gence.

4. In­sur­ance Fraud Reg­is­ter (IFR) - launched in 2012, an in­dus­try-wide data­base of known in­sur­ance fraud­sters.

5. In­sur­ance Fraud En­force­ment Depart­ment - es­tab­lished in 2012. It is a spe­cial­ist po­lice unit ded­i­cated to the iden­ti­fi­ca­tion and pros­e­cu­tion of in­sur­ance fraud­sters.

6. MyLi­cence - a data shar­ing ini­tia­tive with the Govern­ment which will help to tackle ap­pli­ca­tion fraud in mo­tor in­sur­ance. This ini­tia­tive was launched in 2014.

We can eas­ily con­clude from ob­serv­ing the UK mar­ket that the fight with fraud re­quires col­lec­tive and con­tin­ued ef­forts. In UK, IFB takes the lead in man­ag­ing the counter fraud ac­tiv­i­ties to en­sure that the in­dus­try comes to­gether and takes on fraud holis­ti­cally. IFB has de­ployed the us­age of ad­vance an­a­lyt­ics in their war against fraud. So how does this help IFB? By re­main­ing at the cut­ting edge of counter fraud tech­nol­ogy, IFB is able to pick up fraud­ster trends whether cross-car­rier or not. IFB can also iden­tify un­ex­plained re­la­tion­ships and pri­ori­tise which cases are to be in­ves­ti­gated fur­ther. De­spite all of this, the UK in­dus­try con­tin­ues to in­vest £200 mil­lion each year to fight fraud. This is a clear in­di­ca­tion on the in­dus­try’s com­mit­ment to com­bat fraud.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.