Fraud news roundup January 2017
Claims settled by AI in under three seconds? Insurance industry reaction is mixed, plus we look at Travel Sector fraud, the explosive growth in digital motor insurance policies and the ongoing saga of BP oil spill claims.
The AI Claims Bubble – Will It Pop Lemonade?
The reaction to Lemonade Insurance settling a claim in under three seconds has been mixed. Some news outlets focused on the sheer speed of the AI `handler’ sorting out payment for a stolen jacket, plus the lack of real human contact in the process.
But the wider questions regarding Lemonade’s business model, initially touted as P2P (Peer-to-Peer) underwriting, but according to Post magazine, the new venture – launched in 2016 – is more accurately an Affinity Marketing operation. Indeed most delegates agreed with the definition at Insurtech Vegas.
No matter how rapidly Lemonade, or other P2P insurers, grow in the brave new AI claims managed world, the fact is that within the space of a few minutes, a great deal of money could be paid out, without a single human checking the automated system. Will software always be able to detect all types of fraud, or does the industry still need the human touch?
Over 300 Convictions in BP Oil Spill Claims Saga
One of the biggest claims in history, the Deepwater Horizon spillage off the coast of America attracted 311 fraudsters (to date, reports the London FT) who have been convicted of making false claims. That is a small percentage of the total number of claimants, which is around 370,000 claims, costing BP over $62 billion.
The British oil company said the fraud claims were `bad for American business,’ and it will be interesting to see how the remaining claims are dealt with under the Trump regime.
UK Crime Stats Reveals Millions of Fraud Cases
The latest UK crime figures show fraud cases reported to the Police at 3.6million in 2016, which was the first full year of fraud and computer crime stats collated by the ONS (Office for National Statistics).
About 1.9 million of the tally where computer frauds involving credit cards, which shows that data gathering and analysis, often in real time, is arguably the best defence against online fraudsters.
ABTA Calls for `Travel Sickness’ Fraud Clampdown
The Travel Industry association, ABTA, has called for action against the spiralling rise in travel sickness claims. Spanish hoteliers noted in November 2016 that claims by British tourists were way ahead of other nations in this category.
There is a suspicion that claims management companies are targeting the holiday sector, as pay outs for whiplash have been capped recently, reports Travel Weekly magazine.
Whiplash Laws On The Way, Says UK Govt
Post magazine reports that Jane Ellison, Finance Secretary to HM Treasury, has promised new legislation due to be framed this January, in order to prevent whiplash claim fraud, and cut costs for honest drivers. Legislation will then make its way through Parliament.
Digital Motor Cover Could Be Worth £13 billion by 2020
Deloitte estimate that digital motor policies, linked to Telematics, could be worth £13bn by 2020, as the market adapts and expands.
Deloitte’s survey, quoted in Post magazine, found that 17% of drivers would share driving data, in return for features like free roadside assistance. The company sees Telematics policies accounting for about 23% of the total market within three years and the added bonus for the industry is that data-tracked vehicles, and drivers, tend to be safer and less prone to making fraudulent claims.