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Using technology to combat insurance fraud
Ever since the inception of insurance itself, fraud has always been a major, but cynical factor in the industry. Companies…
Ever since the inception of insurance itself, fraud has always been a major, but cynical factor in the industry. Companies lose millions of dollars per year across the entire world. The East African region is no exception. It has become increasingly critical that insurers take a bold and dynamic stance against fraud.
With the advent of technology rippling across into various business sectors, fraudsters are now being met with a battle on their hands. This is because, insurance companies are tapping into advanced, established technology frameworks that revolve around automation and analytics, considerable steps are now being taken to prevent, and combat the menace of insurance fraud.
https://events.cio.co.ke/event/east-africa-insuretech-forum/
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In Kenya alone, insurance fraud dwells at a skyrocketing level, especially in the sector of car insurance. As of 2015, the total cost of fraud in the car insurance sector stood at Ksh307 million. This was the value of fraud that was detected and reported only. By many measures, fraud is the biggest drawback in the insurance sector.
Dr. Bright Mawudor, head of Cybersecurity at IS, said “Through the usage of outdated methods, such as paperwork, paired with unfortunate lack of automation, allows fraudsters to manipulate info to the level at which they can get away with carrying out this crime”. He also added that if the Kenyan insurance sectors do not enhance the technological frameworks in place, then insurance fraud will escalate further, saying “Automation and audit trails need to be put in place to limit and put a stop to the offenders”
https://events.cio.co.ke/event/east-africa-insuretech-forum/
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As technological, and online interfaces advance, fraudsters are continually on the alert for insurers without, or with less effective, prevention mechanisms. Technology asserting itself as the most prominent protection mechanism for insurers, data analytics paired with audit trails, can be at the forefront of the race to detect fraud before it is too late. Predictive modeling can be used to come up with what is called a “suspicion score” a value for the proneness to fraud. The process works like this: Adjusters simply enter data, and claims are automatically given a Suspicion Score to indicate the likelihood that fraud has occurred. The technology behind this involves utilizing data-mining tools and applying quantitative analysis.
Essentially, the use of a layered approach also gives insurers double protection. A “layered approach” refers to using a variety of tools and technologies to tackle a challenge.For example, videos, photos and even live streaming can be used to document evidence at a car crash or crime scene. It’s difficult for the average person to fake a video, especially when the device’s location access is turned on.
https://events.cio.co.ke/event/east-africa-insuretech-forum/
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This has led to the general understanding in the Insurance sector, that a refined way to combat this menace is through technology. By expanding and implementing their resources into predictive modelling, automation, audit trails and AI tools.