{"id":18453,"date":"2020-05-20T12:07:24","date_gmt":"2020-05-20T16:07:24","guid":{"rendered":"https:\/\/www.insurance-canada.ca\/?p=66437"},"modified":"2020-05-20T12:07:24","modified_gmt":"2020-05-20T16:07:24","slug":"insurance-fraud-in-times-of-crisis","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/05\/20\/insurance-fraud-in-times-of-crisis\/","title":{"rendered":"Insurance Fraud in Times of Crisis"},"content":{"rendered":"<h3><strong>By Simon Staadegaard, Customer Success Manager, FRISS<\/strong> <span>\u2014<\/span><\/h3>\n<p>The COVID-19 Coronavirus is causing fear, uncertainty and doubt in the form of lockdowns, runs on toilet paper, hospital capacities and many other areas including businesses. Many believe it will lead to an economic recession, the scale of which is still unknown. As with any major catastrophe, fraudsters are looking for new ways to cash in.<\/p>\n<p>Insurers must be prepared for the inevitable increase in fraud that occurs during times of crisis.<\/p>\n<p>Detecting fraud is not an easy task and requires thorough knowledge about the nature of fraud, how it can be committed and how it\u2019s concealed. People don\u2019t just wake up one day and plan to commit fraud \u2013 there are motives behind it. In regular times and in times of crisis, it helps to consider the three elements required to commit fraud.<\/p>\n<h4>The Fraud Triangle<\/h4>\n<p>A criminologist by the name Donald Cressey created the Fraud Triangle in the 1950\u2019s, suggesting there are three elements to committing fraud:<\/p>\n<ul>\n<li>Rationalization: The individual determines that it is okay to commit fraud.<\/li>\n<li>Pressure: This can come from financial distress, a drug or gambling addiction, or the desire to maintain a lavish lifestyle.<\/li>\n<li>Opportunity: This is the unchecked ability to actually commit the fraud.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/www.insurance-canada.ca\/wp-content\/uploads\/2020\/05\/The-fraud-triangle3-500x500-1.jpg\"><img decoding=\"async\" loading=\"lazy\" class=\"aligncenter size-full wp-image-66438\" src=\"https:\/\/www.insurance-canada.ca\/wp-content\/uploads\/2020\/05\/The-fraud-triangle3-500x500-1.jpg\" alt=\"The Fraud Triangle: Rationalization, Pressure, and Opportunity (FRISS)\" width=\"500\" height=\"440\"><\/a><\/p>\n<h4>Financial Pressures<\/h4>\n<p>With the present global situation, pressure will mount as businesses find themselves in unplanned financial distress. Many won\u2019t make sales because they are forced to close their doors. Others are already seeing a drastic drop in demand as consumers stop traveling, eating out and gathering in large groups. According to a recent McKinsey &amp; Company brief, business recovery will not start until the end of 2020 or beginning of 2021.<\/p>\n<p>As a result, business owners could panic and take drastic steps like burning down their building to cash in on an insurance policy or inflating claims for business disruption. For many, desperate times call for desperate measures. We\u2019ve seen this play out in past economic downturns. Some scams are obvious; others take a keen eye to spot and investigate.<br \/>Impact on Carriers<\/p>\n<p>Property and casualty insurance companies will incur underwriting losses directly as a result of the outbreak. Equity market fluctuations and cuts in interest rates to limit the economic fallout will also affect investment income. The most immediate impact will be in the valuation of equity investments and fixed income assets.<\/p>\n<p>Claims have already begun to manifest in niche industries like hospitality, tourism, transportation and entertainment as trips, business meetings and events are cancelled, and more people are testing positive. In this regard, rationalization may be easier than ever, even for more \u201chonest\u201d claimants. Twisting the facts slightly to chance a payout seems worth it when there\u2019s no other way to turn, or despite knowing better, the terms of a policy clearly state a particular incident is not covered.<\/p>\n<h4>Taking Care of Customers<\/h4>\n<p>In times of crisis, insurance carriers bear the burden of making good on their core promise: taking care of their customers when they need it most. When faced with potentially devastating losses, this can be a challenge to properly execute. Carriers can act most swiftly when they are confident they have closed the opportunity for their insureds to commit fraud.<\/p>\n<p>Automating assessment of risk and streamlining the detection of fraudulent cases is a proven method of preventing payout on fraudulent claims. While this makes immediate, positive impacts on a carrier\u2019s bottom line, it\u2019s more important side effect is the confident, quick payout of legitimate claims. In the long term, it also shouts a clear message that carriers do not tolerate fraud, stimulating honest behavior.<\/p>\n<h4>What\u2019s Next?<\/h4>\n<p>Like nearly all businesses, insurance carriers will face a challenging \u201cwhat\u2019s next\u201d response. While calling together the response teams needed to handle an influx of claims, carriers are also struggling to mobilize employees\u2019 abilities to carry out day-to-day business from their home offices. In addition to the obvious struggles of working from home for those not used to it, there are also hidden challenges: slower or congested home Wi-Fi networks, limited access to company VPN and servers, and a challenge to remain collaborative across teams.<\/p>\n<p>The world will learn many lessons from this current crisis. Some lessons will come immediately while others will be learned over the course of years. Carriers will face interesting decisions on what constitutes \u201cbusiness as usual\u201d moving forward, as both their customers and employees have seen the light of new possibilities, new challenges, and new opportunities to succeed.<\/p>\n<p>And it won\u2019t just be businesses who have found new ways to succeed \u2013 the fraudsters will as well. They always do. We\u2019ve learned the world was not prepared for this pandemic. Will you be prepared to battle emerging fraud schemes during the next months? Download this eBook to learn how to automate the essential commercial risk selection process.<\/p>\n<h4>Learn More<\/h4>\n<p>Watch our on-demand webinar, <a href=\"https:\/\/knowledge.friss.com\/on-demand-webinar-request-another-unseen-enemy-thwarting-covid-19-claims-fraud\"><em><strong>Another Unseen Enemy: Thwarting COVID-19 Claims Fraud<\/strong><\/em><\/a>, to learn:<\/p>\n<ul>\n<li>How this pandemic is affecting carriers and their customers today<\/li>\n<li>The clever fraud schemes carriers will battle in the near and short term<\/li>\n<li>What tools and technologies should be considered to ensure your insureds receive the customer service they deserve<\/li>\n<\/ul>\n<h4 class=\"smallhead\"><b>About the Author<\/b><\/h4>\n<p>Simon Staadegaard is the Customer Success Manager at FRISS. He has worked for 30 years in the financial industry, with a heavy focus on fraud prevention.<\/p>\n<p>For 10 years, he was head of the Special Investigations Unit at DLL, a worldwide leasing and financing company which operates in more than 36 countries.<\/p>\n<h4 class=\"smallhead\"><b>About FRISS<\/b><\/h4>\n<p>FRISS is 100% focused on automated fraud and risk detection for P&amp;C insurance companies worldwide. Their AI-powered detection solutions for underwriting, claims and SIU help 175+ insurers grow their business. FRISS detects fraud, mitigates risks and supports digital transformation. Insurers go live within 4 months, realize 10 times ROI and 80% increase in straight through processing of policy application and claims. FRISS solutions help lower loss ratios, enable profitable portfolio growth, and improve the customer experience. For more information, please visit <a href=\"https:\/\/www.friss.com\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">FRISS.com<\/a>.<\/p>\n<p class=\"referencetext\"><i>Source: <a href=\"https:\/\/www.friss.com\/blog\/insurance-fraud-in-times-of-crisis\/\">FRISS<\/a><\/i><\/p>\n<p> <a href=\"https:\/\/www.insurance-canada.ca\/2020\/05\/20\/friss-fraud-in-times-of-crisis\/\">Read the original article at Insurance-Canada.ca <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Simon Staadegaard, Customer Success Manager, FRISS \u2014 The COVID-19 Coronavirus is causing fear, uncertainty and doubt in the form of lockdowns, runs on toilet paper, hospital capacities and many other areas including businesses.&#46;&#46;&#46;<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18453"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=18453"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18453\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=18453"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=18453"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=18453"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}