Combating fraud in the cost of living crisis with voice-based risk assessment technology
Clearspeed is a Business Reporter client.
A rise in speculative fraud amid the UK’s cost-of-living crisis has the insurance industry under pressure – but it’s also an opportunity to embrace innovative approaches and bring new technology into the fold.
With a rapid rise in energy costs, accelerated inflation and increased household expenses among many other burdens, the UK’s cost-of-living crisis is creating a growing number of financially squeezed households.
One consequence of the cost of living crisis is that the insurance industry is seeing a sharp increase in speculative fraud, wherein people exaggerate legitimate claims or submit bogus claims for household and property, particularly lost gadgets. In fact, Zurich UK reported last year (2022) that the number of fraudulent property claims from 1 January to 31 May was 25 per cent higher than in the same period in 2021.
Further, YouGov research commissioned by the Insurance Fraud Bureau (IFB) last year with a sample of 2,175 respondents found that one in five 18-to-25-year-olds would “likely” commit an act of insurance fraud if they were struggling financially, and one in 10 people said they would consider insurance fraud if struggling financially.
With the industry likely to see a continued rise in speculative fraud, the challenge for insurers is addressing fraud mitigation so legitimate claims are paid quickly and without unnecessary friction for their customers, while also more efficiently allocating resources to higher-risk claims that require investigation.
Increased speculative fraud in response to the cost-of-living crisis is committed by people who typically would have not committed or considered fraud under normal circumstances but need the extra cash to get by. Current fraud detection models may not recognise this fraud because it’s ad hoc rather than patterned, leaving insurers with the challenge of identifying these claims that existing technology and databases can’t solve for.
This is a massive opportunity for insurers to become less reactive in their response to mitigating fraud through technology innovation. This includes, for example, integrating new technologies into existing models and systems to assess risk more accurately, and more quickly.
With Clearspeed’s AI-powered voice analytics, insurers can assess the risk of fraud in a claim by simply asking customers a short set of yes/no questions. Low-risk claims can be fast tracked, while alerts flag high-risk claims for additional follow-up. Available in any language, at any time, every customer receives a consistent experience that is entirely objective and unbiased – and no patterns are required to inform the assessment. There is also no bias in the automated delivery, nor in the scoring of responses. Simply put, instead of searching for a needle in a haystack, this technology helps clear the hay in claims scenarios.
Equally important is that Clearspeed is a technology that augments, not replaces, human effort, by helping triage claims at speed without trading risk. This is key because as insurers put greater emphasis on automation to address industry challenges, we’re likely to see a shift in the way that people are deployed across areas such as first notification of loss (FNOL).
Particularly as the need for speed increases, fraud mitigation demands innovative approaches to identifying risk as the insurance industry navigates increasing complexity. By bringing new and unique data to the claims process, Clearspeed is redefining risk assessment with unparalleled accuracy, speed and simplicity.