Challenges with Assessing Insurance Fraud Risk


I recently had a conversation with several industry colleagues discussing challenges of assessing insurance fraud risk. We can all come up with the usual proactive survey questions, baseline check list and traditional risk assessment methodology but depending on who you’re surveying at what level within the organization or at what time within someone’s busy schedule you may receive more opinion that fact.

Here are a few challenges you may face with fraud risk assessment:    

·        When new products and growth out paces your ability to evaluate each risk

·        Trying to identify fraud risk across multiple programs and lines of business

·        Access to internal and external data needed to assess fraud

·        Trying to assess data across claims, new business, underwriting, vendor, and procurement

So how do you overcome these challenges:

·        Establish an Enterprise Risk Management Program

·        Understand the quality of the data from across your enterprise

·        Deploy data fusion, entity resolution capability and network generation to resolve data quality and build an agile governance risk compliance process

·        This makes it easier to manage your entire risk and compliance from one place

I would like to hear your thoughts and challenges you may have run into with fraud risk assessment and how you overcame those challenges.  


  • PhilS
    PhilS Posts: 3 Rising Star
  • Alex_Johnson
    Alex_Johnson Posts: 46 QUANTEXA TEAM
    edited March 2023

    Thanks @PhilS ..What do you think is next down the track in claims prevention innovation?

  • Alex_Johnson
    Alex_Johnson Posts: 46 QUANTEXA TEAM
    edited March 2023

    @Angel_Allianz - really interested in your / Allianz view on this?

  • MattG
    MattG Posts: 2 New Member

    @Alan_Haskins Just to through in a provocation.

    In the big scheme of things, I think sadly insurance fraud (and even insider / corporate fraud) can disappear into the risks that make it on to the top table.

    Given policy fraud rates (even taking into account Quote Manip) are low compared to the pool of honest customers and Claims fraud should be a managed risk (far more savings than paid away losses) - then the in year residual risk (unmitigated financial loss) should be relatively low.

    if we compare this to reg risks like Consumer Duty, Solvency, Underwriitng Cycle, Claims inflation, then insurance fraud can be a poor cousin (if not missed off the family tree entirely). if the organisation is mature and does understand the aggregate risk / threat then it may appear on a top 10, 20 or 30 top risks list

    I do actually agree with you, but very often insurance fraud (and fraud in general) needs an additional fraud risk management process as the ERM process is unlikely to get to a sufficiently granular level to properly understand, assess and track mitigation of fraud at a suitable level.

  • Alan_Haskins
    Alan_Haskins Posts: 15 QUANTEXA TEAM

    @MattG We agree insurance fraud risk needs its own standalone process and governance. Fraud risk identification and prevention is a personnel-centric employee facing risk.

    Your business owners are on the front lines in preventing fraud through fraud risk governance, understand your current capabilities and where you want to take you risk detection capabilities. Creating a strong fraud risk culture. Perpetual fraud risk assessment, thinking like a fraudster and ask business owners to discover what they don’t know. Use fraud control activities, like data to uncover fraud, your data is your most powerful asset. Have investigative standards and take corrective action, laying the groundwork for investigations and policies and procedures for improvements plans. And finally create fraud monitoring processes and report on best practices.