Identity Verification – More Than a Tick Box Exercise

The cost of fraudulent employers’ and public liability claims can be far higher than fraudulent personal lines claims. Some fraudulent liability claims are highly organized with a large total value, some are opportunistic; all will involve the exaggeration of injuries or losses incurred as a result of a genuine or fictitious incident. 

So what is driving this increased fraud risk to the industry? Fraudsters do not operate in siloes and will move across sectors to exploit any perceived weaknesses in fraud controls. The successful clamp down on personal lines fraud via insurer counter fraud strategies, industry collaboration and Government regulation has seen fraudsters transfer their focus to employers’ liability and public liability claims.  At the same time, there has been a rise in claims management company activity seeking to encourage liability claims.  This coincides with new regulation and fraud controls related to motor and whiplash claims which are limiting previously available revenue streams to these organisations. And compounding this situation, insurers jointly acknowledge that counter fraud strategies and controls in the commercial claims environment are currently less developed than for personal lines. Commercial claims data is held in many different places presenting logistical challenges to identifying serial claimants and organised fraud networks operating in the commercial lines environment.

CUE and the IFR are invaluable tools and the IFB is looking at enhancing data collection and analysis to support identification of links in the liability arena. Meanwhile the claims industry is rapidly applying the learning from its success combatting personal lines fraud to the fraud challenges faced with liability claims. 

Undoubtedly, skilled claims handlers with rapid access to information drives the ability to accurately and appropriately resolve claims and dynamically prevent fraud, whilst treating honest customers fairly.  And so it stands to reason the more insurers and solicitors know about their customer and claimant, the more they are protected from both financial and reputation risk.  

Identity verification solutions can represent a powerful control for the claims industry, but this counter fraud tool is not always being implemented to best strategic effect.  A premium identity check service will provide users with far more than confirmation of identity.  It builds a profile and framework surrounding the subject in question to include previous linked addresses and identities, credit bureau profiles, together with previous personal lines claims history, to include behaviours and historic insurer relationships. This wealth of information is invaluable when considering liability fraud and can assist in the identification of organised fraud rings.  Solicitors can equally extend the remit to include an anti-money laundering check where relevant.

From an operational perspective, a premium service should be both web accessible and simple to integrate into back office legacy systems and software house platforms; it will also be swift and simple to use - requiring no user training, and be easily incorporated into business processes and workflow.   The identity verification landscape is interesting. Both the insurance and legal sectors acknowledge the need to ‘know your customer’ and control risk when managing a claim or onboarding a new customer.  Unfortunately, there are those operating in the claims market that still see ID verification as a tactical, box ticking exercise.  These organisations continue to opt for the sub-standard, under sold services available. This, in turn, means they significantly restrict their holistic view of the claimant or customer and in doing so are more vulnerable to fraud or becoming an agent of fraud.  

Forward thinking organisations in the claims industry are recognising the need to mirror the sophistication and maturity of their ever evolving fraud opponents.  They apply the most comprehensive identity verification tools available to weed out the liability fraudsters and fast track the genuine claimants.  By seizing this opportunity they protect their bottom line and their reputation and the fraudsters, who we know seek to exploit the weakest links, will target those competitors with sub-standard controls. 

Discover more on how the PL and EL landscape has changed over the past decade and how insurers and solicitors can work together to tackle the emerging threat of fraud in commercial lines.