How FRISS uses data and AI to detect insurance fraud
Founded in 2006, FRISS is on a mission to make insurance more honest by stopping fraudsters before they harm customers.
The company’s platform offers end-to-end support through the full policy lifecycle, and is 100% focused on automated fraud and risk detection for P&C insurance companies worldwide. Their solutions for underwriting, claims, and special investigations are fueled by an instant-on combination of AI, text mining, image analytics, geolocation, predictive models, internal and external data sources and expert knowledge rules.
Last year, according to FRISS, together with its customers, it saved the insurance industry over US$1bn in fraudulent claims being prevented or not paid out.
Digital transformation has led to more complex security
Demand for anti-fraud solutions has grown since the company was founded, and it now has over 200 implementations across 40+ countries, with offices in Chicago, Santiago, Paris, Cologne and Utrecht.
In a recent study by FRISS, the challenges and opportunities facing insurers in their efforts to combat fraud throughout the entire policy lifecycle are highlighted. The study gathered input from over 400 insurance professionals worldwide and provides insight into topics such as fraud schemes, data challenges, process automation and more.
Survey respondents have differing views on the challenges and benefits of fraud detection software solutions. The common theme however is the data challenge; from underwriting to claims to special investigations. The difficulty is harnessing timely data to respond quickly when fraud is detected. FRISS’ past biennial surveys indicate that insurance professionals have struggled with inadequate data – either poor-quality internal data or limited access to external data sources.
COVID-19 will have a lasting impact on insurance, in large part because the pandemic has accelerated digital processes. Insurers are using a multilayered approach to minimise their risk of fraud and improve protection. While these trends are continuing, insurers also are better positioned to take advantage of digital tools to combat fraud end-to-end.
Exploiting gaps in insurance systems
Fraudsters continue to perpetrate insurers and work to exploit emerging system gaps, continuing to drive up the cost of insurance for consumers. For 41% of survey respondents, keeping up with modern fraudsters was their greatest challenge in effectively responding to fraud. The top fraud schemes that saw an increase in popularity the past year are claiming false injuries, nondisclosure of relevant information, and staged accidents.
The industry generally agrees fraud accounts for about 10% of all claims cost. However, one change since the prior survey is an increase in the percentage of claims suspected as fraudulent. In 2021 the suspicion of claims containing a potential element of misrepresentation or fraud rose to 20% – a rise predicted by FRISS in the previous report.
