Global claims leaders have warned ongoing economic pressures have sparked a new wave of fraud made worse by the use of AI.

Speaking on a panel in London Gareth Davies (above) global head of fraud, Allianz, said: “Fraud cannot happen in a vacuum. The economy is influencing the claims we are seeing. During the financial crisis in 2008/9 we saw a significant rise in claims with a similar trend during Covid. It is because it drives financial pressure on people which increases the temptation to commit fraud.

“Secondly if you are looking to liquidate a valuable asset, be it an aircraft or a vessel and there is no market for that asset it is then you might consider alternative actions.

“Globally the picture is bleak. It is tough everywhere and it is creating a challenge for the industry.”

Javier Llorente managing director & international head of claims solutions at broker Marsh said the threats faced by the industry were significant.

Participating on the panel during the Insurance Innovators’ Fraud and Claims Conference he said: “Inflation, the hopes for an economic recovery and supply chain disruption are seeing an increase in fraudulent claims.

“For large and complex losses, when they occur there is a challenge to identify fraudulent claims, given there is a sense of urgency to get those claims paid.

“Inflation, the hopes for an economic recovery and supply chain disruption are seeing an increase in fraudulent claims. For large and complex losses, when they occur there is a challenge to identify fraudulent claims, given there is a sense of urgency to get those claims paid.’’

Javier Llorente, Marsh

“In the case of natural catastrophes, we have to examine all the data, but the carriers remain concerned to ensure a smooth claims process.

“For the broker and the carrier, it is all about communication, and how we break down the silos between departments. We need to be more collaborative. The more we work together the more we can deliver the solutions.”

Davies added: “If you are creating your anti-fraud function in a silo then you are setting yourself up to fail . It needs to be a living breathing part of your operation.

“How do we go further? Data is important and knowing your customer is key. As a claims team you can make a prediction even before then claim arrives if you really know your customer and their habits.

“We need to reman agile and alive to the ever-changing risks of fraud.”

However, Davies continued that as an insurer when claims arrive, they cannot be simply viewed as fraudulent until proven otherwise.

“You cannot start your processes with a focus on fraud detection,” he explained. “It cannot dominate your strategy. The focus has to be on paying the real claims. The byproduct of this will be eventually there will be some claims you cannot pay.

“Your fraud strategy has to be across the business. As such we need to get the tech right. Everything we do in terms of fraud detection has to be seamless in the background. We need to work in a way we are able to predict the outcomes for certain sections of our customers.”

Llorente added that there needed to be an understanding of what the impacts maybe if carriers and brokers work with third parties.

“Both brokers and carriers are looking at how they can best approach the less complex claims, love value and standards” he explained. “There has been a move to offshore claims bug we have to ask in those cases who is running the fraud analysis, and does it match with the standards you have set internally?

“My view is that innovation and technology is not only the solution, but it can be part of the problem. For example, we are using technology such as drones to access sites and assess the level of damage. But can we trust the images we receive back?”

“We are working with different parts of our supply chain to put in place the same processes but in our separate operations,” Davies added. “Over the past 18 months we have identified key anti-fraud patterns in our supply chain.

“We are collaborating to create a joined up anti-fraud strategy where we are all working towards a similar outcome which includes a zero-tolerance approach when we identify a risk.

“We can never ignore our moral and legal duty to detect fraud efficiently and responsibly.”