Fraud In Insurance: What Tools To Choose To Prevent It?

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According to a study by YouGov and LeLynx, nearly 20% of French people admitted to committing insurance fraud in 2022. This figure is almost double what it was in 2021. If you are an insurance company, these scams are costing you money, as well as your customers, if you do not equip yourself with the right tools. So, what software is available today to help prevent insurance fraud? Find out in this article.

1. Insurance Fraud: Definition And Figures

Insurance fraud is "an intentional act, carried out by a legal or natural person, to obtain an undue profit from the insurance contract," according to the French Agency for the Fight against Insurance Fraud (ALFA).

In 2022, insurance fraud cost the French insurance industry €368 million. This figure has been increasing in recent years, due to several factors, including:

  • The development of new technologies, which make it easier for fraudsters to create fake documents
  • The increasing complexity of insurance contracts, which makes it more difficult for insurers to detect fraud
  • The rising cost of living, which may lead people to commit insurance fraud to make ends meet

2. The Impact Of Insurance Fraud On Insurers

Insurance fraud is a major financial burden for insurers. According to the report of the Commission of Inquiry on the Fight Against Fraud in Social Benefits, in 2019 the French insurance industry lost €368 million to fraud. The cost of fraud is passed on to policyholders in the form of higher premiums. For example, the cost of multi-risk home insurance has increased by 34% in France over the past 10 years, with fraud being one of the main drivers of this increase.

Insurance fraud can also damage the reputation of insurers. When policyholders learn that their premiums are being used to pay for fraudulent claims, they may lose trust in the insurance industry and be less likely to buy insurance.

The increase in fraud losses in recent years can be explained by two factors. First, the number of fraudsters is increasing. Second, insurers are becoming more effective at detecting fraud, thanks to the use of new technologies.

3. What Anti-Fraud Software Can Be Used To Prevent Insurance Fraud?

As an insurer, you can implement a variety of tools to fight against document fraud. These tools can be used at every stage of the customer journey, from underwriting to claims, and they can help you detect fake documents and prevent fraud.

For example, imagine a case where a customer is applying for car insurance. The insurer uses a strong customer authentication solution, such as ShareID, to verify the customer's identity. The insurer then uses a document fraud detection solution, such as Finovox, to analyze the customer's documents for signs of fraud.

A. Verifying The Identity Of Policyholders With ShareID

One of the most important steps in preventing insurance fraud is to verify the identity of policyholders. ShareID is a French-based Authentication-as-a-Service  (AaaS) solution that can help insurers do this quickly and easily.

How it works: The user takes a video of their government-issued ID document and a video of their face with their smartphone. This information is used to verify the authenticity of the identity document and to create a verified digital identity that can be reused for future transactions. And without storing any personal data or biometrics.

What makes ShareID unique: ShareID has developed its ow AI-powered algorithms to verify the authenticity of identity documents in partnership with the French Military Police equivalent to border control in real-time. Their patented technology has an accuracy rate of 99.9% and can be used to verify ID documents from over 120 countries and the passports of the entire world.

B. Detecting Fake Documents With Finovox

Finovox is a French-based AI-powered document fraud detection solution that can help insurers as well as other services companies detect fake documents, such as accident reports, claims, and tax returns.

How it works: Finovox uses a variety of AI-powered algorithms to analyze documents for signs of fraud. These algorithms look for things like signs of tampering, incorrect or missing information, and inconsistencies in the document. 

What makes Finovox unique: Finovox can analyze 100% of documents, regardless of their type, language, or format. This makes it a valuable tool for detecting fraud in many insurance processes.

An Example To Explain The Process

Madame F. applies for car insurance with Insurance A. She provides documents, including her driver's license, vehicle registration, and insurance history report. ShareID, a strong customer authentication solution, analyzes Madame F.'s driver's license. The tool detects inconsistencies in the document, suggesting that it has been tampered with. Meanwhile, Finovox, a document fraud detection solution, analyzes Madame F.'s other documents. The tool finds that the insurance history report has been modified to show a lower bonus/malus ratio.

As a result of these findings, Insurance A denies Madame F.'s application.

In this case, Madame F. was trying to commit insurance fraud by providing false documents. By using a combination of tools like ShareID and Finovox, insurers can help prevent fraud and protect themselves from financial losses.

To learn more about these solutions and how you can implement them for your business, reach out to our experts! ShareID Finovox

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