How AI Reduces Insurance Fraud By Improving Customer Trust
The insurance industry’s attempt to catch up on key digital technologies, including mobile, omnichannel, payments, and services are being made more urgent by the pandemic’s hard reset to industry revenues. Artificial intelligence and machine learning can help the insurance industry digitally and securely catch up, as discussed in the recent webinar with Kount and Aite Group, How to Stop Insurance Fraud and Accelerate Customer Growth, The New Role of AI-Driven Risk Detection.
62% of insurance providers are adding new digital products and services this year, according to a January 2020 survey by Javelin and Kount.
40% of insurers are planning to expand mobile support so customers can open new policies, file claims, and submit documentation according to the Javelin survey.
AI technology is increasingly deployed to detect and prevent fraud, which costs the insurance industry an estimated $40B a year, according to Ernst and Young.
Digital fraud is the fastest growing area of insurance fraud today, projected to grow by 21% by 2026, with fraud losses in this area alone reaching $12B.
Reducing Risk and Fraud By Improving Customer Trust
AI can reduce both risk and fraud while improving digital identity verification at the same time. Trust is a powerful accelerator in any digitally-enabled client/customer relationship, and Kount’s Identity Trust Global Network is designed to enable identity trust at scale. As Jay Sarzan, Senior Analyst with Aite Group said,”Fraud prevention solutions need to address the most common types of insurance fraud, like bots that submit illegitimate bulk quotes to open fake policies by using consumer information purchased or stolen from lead generators or brokers’ books. An AI-driven solution that establishes trust or risk in real-time can detect and stop this automated behavior.”
4 Takeaways on How to Stop Insurance Fraud and Accelerate Customer Growth with AI
1. Insurers face fraud threats that are increasing in scale, scope, and sophistication, compounded by their relative inexperience with new digital business initiatives. Fraud threats include identity assumption, ghost brokering, bot quotes, crash for cash, claims padding, claims staging, and insured customers providing misleading information. Policy prospects and customers are often where the majority of fraud begins, making digital identity verification a must-have in any digital risk and fraud prevention solution. The following are the many forms of fraud insurance firms face today:
2. The majority of insurance companies underestimated how quickly mobile technologies, including smartphones, omnichannel selling, and ubiquitous Wi-Fi availability would create new threats to their businesses. The result is insurance companies are facing among the most sophisticated, orchestrated fraud attempts of any industry today as bad actors and organized crime syndicates seek to capitalize on the many weaknesses in their existing digital infrastructures. The graphic below illustrates the digital transformation of their industry that happened faster than the majority of insurance companies anticipated, making digital trust an urgent priority.
3. Digital transformation is here, and many insurance companies aren’t prepared. Amazon selling insurance online in India is a leading indicator of what’s coming to the rest of the world. Jay Sarzan from Aite Group says that customers buying insurance are now expecting the same simplicity, speed, and trust that Amazon has achieved with the billions of dollars of transactions they do every year. Citing Amazon’s successful launch of selling insurance in India, Jay Sarzan observes that:
“Amazon truly is setting the standard by which consumers judge their consumer experiences. Buying insurance will take less than two minutes. Now, I mean again, it’s for very simple policies for two and four-wheel vehicles in India. I hadn’t looked at how they’re underwriting it, but it doesn’t matter. They’re using a lot of data to do it, to deliver a good consumer experience. Just because you can pick up your iPhone and tap on your Amazon app, or you could even say, “Hey, Alexa,” or whatever it is that you need from Amazon, and it will have it at your door in roughly a day or two.”
Jay called this delivering an Amazon Experience. For insurance companies to get there, they must excel at identity trust.
4. Kount’s approach to using AI for digital identity verification can accelerate marketing efforts by identifying those prospects with the highest propensity to buy while increasing customer trust over their lifecycles of buying and service. Kount’s unique AI-based approach to helping insurance companies identify visitors, manage leads, and determine who is shopping for a quote can also help to identify high-value or high-risk leads. Kount customers can optimize marketing and sales efforts, personalize customer experiences, and reduce the time spent vetting prospects. The following explains how AI-driven digital identity verification can also benefit marketing and sales across customer lifecycles.