“The insurance industry lost around $308.6 billion due to fraud in 2022, according to estimates from the Coalition Against Insurance Fraud” – Insurance Fraud Statistics
Based on the provided statistics, it is evident that the insurance industry has been grappling with a significant rise in fraudulent activities. Moreover, as technology continues to advance, the number of scammers exploiting these advancements has also increased. Consequently, integrating technology into the insurance industry has become a pressing necessity to effectively address and counter the growing threat posed by fraudulent actors.
Source: Click here
Based on the provided data above, it is evident that life insurance frauds outweigh other types of insurance fraud. In this blog post, we will shift our focus to home insurance fraud and explore how fintech plays a crucial role in preventing such fraudulent activities.
Let’s dive into Fintech :
The term “financial technology,” or “fintech,” refers to the incorporation of technology into financial services to improve their accessibility and usability for users. It is an all-encompassing phrase that refers to a variety of technologies used to improve, modernize, digitize, or disrupt financial services. Any business that modifies, enhances, or automates financial services for both businesses and consumers is referred to as a fintech company. Mobile banking, peer-to-peer payment systems, and trading platforms are a few examples of fintech. Technology breakthroughs like those in the internet, mobile devices, AI, big data, and blockchain have fueled the evolution of fintech, which aims to streamline financial operations and make them more accessible and affordable.
Fintech in Insurance:
The integration of fintech in insurance provides numerous benefits. It can be used to make insurance more accessible, improve the customer experience, personalize insurance, reduce fraud, and increase efficiency. For instance, fintech can be used to create mobile insurance apps that allow people to buy and manage insurance policies from their phones. It can also be used to create chatbots that answer customer questions about insurance policies and AI-powered claims processing that speeds up the claims process. Overall, fintech is having a positive impact on the insurance industry by making insurance more accessible, improving the customer experience, personalizing insurance, reducing fraud, and increasing efficiency.
The Global FinTech in the Insurance market is anticipated to rise at a considerable rate during the forecast period, between 2022 and 2030. In 2021, the market is growing at a steady rate, and with the rising adoption of strategies by key players, the market is expected to rise over the projected horizon. – FinTech in Insurance Market Till 2030 – MarketWatch
Despite the fact that fintech has offered the insurance industry many benefits as mentioned above, fraud detection is proving to be its greatest contribution, particularly in the field of house insurance.
Common Home Insurance Frauds
Here’s some usual house insurance fraud
Inflating the value of stolen goods:
This is a very common type of home insurance fraud. In this type of fraud, the insured will claim that more goods were stolen than they actually were, or that the goods stolen were worth more than they were.
Lying about the extent of the damage:
Such fraud involves a policyholder stating that he or she has caused more damage to their home than is actually true. This can be done by exaggerating the extent of the damage, or by claiming that damage was caused by something that it was not.
Intentionally damaging property to make a claim:
This type of fraud is less common, but it does happen. In this type of fraud, the policyholder will intentionally damage their own property in order to make a claim. This can be done by setting fire to their home, or by breaking windows or doors.
Falsifying documents:
This type of fraud involves the policyholder falsifying documents in order to support their claim. This can include doctoring photographs, or creating fake receipts or invoices.
Collusion with contractors:
This type of fraud involves the policyholder colluding with a contractor to inflate the cost of repairs. In this type of fraud, the contractor will overcharge the policyholder for repairs, and the policyholder will then file a claim with their insurance company for the inflated amount.
Did you know?
Data shows that earthquake insurance is becoming more common, especially in western states. In 2020, 23% of homeowners said they had earthquake insurance. By comparison, only 15% of homeowners said they had this coverage in 2018.
Source: Homeowners Insurance Claim Statistics and Facts | Bankrate
How Fintech helps Insurance companies from fraud home insurance claimers?
Fintech is helping insurance companies combat home insurance fraud in a number of ways. For instance, fintech companies can use data analytics to identify suspicious activity, such as patterns and anomalies in claims data that may be indicative of fraud. For example, an insurance company might use data analytics to identify claims that are filed for similar losses in a short period of time or claims that are filed for losses that are significantly higher than the policyholder’s deductible.
Additionally, machine learning can be used to automate the process of fraud detection. This can free up human resources to focus on other tasks, and it can also help to improve the accuracy of fraud detection.
Another way that fintech is helping insurance companies combat fraud is by using blockchain technology to create a secure and transparent record of claims. This can make it more difficult for fraudsters to file fraudulent claims, as they will need to create fake blockchain records.
Chatbots can also be used to collect information from policyholders about their claims. This information can then be used to assess the validity of the claim.
Did you know? Chatbots helped businesses to cut $8 billion in costs in 2022 by saving time agents would have spent interacting with customers. – Source
Fintech advantages in insurance fraud detection
Reduced costs: Fintech can help insurance companies save money by reducing the costs associated with fraud detection and investigation. This money can then be passed on to policyholders in the form of lower premiums.
Improved customer experience: Fintech can make it easier and faster for policyholders to file claims, which can lead to increased customer satisfaction and loyalty.
Increased efficiency: Fintech can help insurance companies increase the efficiency of the claims process by freeing up resources to focus on other areas, such as customer service.
Final thoughts:
“The major winners will be financial services companies that embrace technology.” – Alexander Peh, PayPal and Braintree
As a conclusion, it is clear that fintech has emerged as a benefit for insurance businesses, allowing them to improve their functionality and reduce errors, particularly in identifying fraud claims. By utilizing this incredible technology, insurance professionals can stop home insurance fraud, safeguard their business, and guide it toward better growth.
Interested in integrating technologies to your insurance business to drive it in the path of success? Agira Technologies is here to serve you with better minds, who can provide you with better tech support for your insurance processes. Want us to elaborate more? Text us “HI”.
Fintech and AI/ML services at Agiratech
- Claims Processing
- Claims Fraud Detection
- Claims Adjudication
- Automated Underwriting
- Submission Intake
- Pricing and Risk Management
- Policy Servicing
- Insurance Distribution
- Product Recommendation
- Property Damage Analysis
- Automated Inspections
- Customer Lifetime Value Prediction
- Speech Analytics
- Customer Segmentation
- Workstream Balancing for Agents
- Self-Servicing For Policy Management
- Claim Volume Forecasting
Want to discuss more on Fintech? Come and meet us here.
