Inability to share information ‘benefits fraudsters’

by Kate Tilley, Resolve Editor

Insurers’ inability to share information on fraudulent claims without potentially breaching the Privacy Act hampers fraudulent claim investigations, says Suncorp Group’s manager, fraud & intelligence, Chris Loane.

He told the AILA-Queensland Law Society conference on the Gold Coast Suncorp identified more than $50 million in fraudulent claims annually, “but we’re just scratching the surface”.

He said systemic fraudsters were aware of the limitations on insurers sharing information. “If they can get away with something at one insurer, they’ll try it at another.”

If a fraudster knew company X only investigated, say, $5,000+ claims, or only if police had been notified, “they learn that and use the parameters to their advantage and our disadvantage”.

In the United Kingdom, insurers pooled accident information overnight, which meant serial fraudsters were more easily identified. But Australia could not create “a black list”.

But the Insurance Fraud Bureau, a taskforce of the Insurance Council of Australia, could share limited data, via a Privacy Act exemption. Mr Loane said there was a lot of cross-insurer fraud and suggested the bureau get additional exemptions on public interest grounds.

He also called for more jail sentences for insurance fraud, saying they were more common in the US but, in Australia, padding claims was “a national sport”.

Caravans were easier to steal and rebirth than vehicles, because they had less identification and there was a “severe deficiency” in ID systems for boats and no national register. It was possible to get a certificate of registration for a boat in Queensland without the boat being sighted and using a fake vehicle identification number. “The boat might not even exist, but you can insure it and, hey, a few weeks later it’s stolen.”

Mr Loane said NSW inspected boats, but Queensland had insufficient inspectors. “Criminals identify these gaps and hone in on them.”

Suncorp’s fraud platform included a variety of techniques to review claims, not just the traditional triggers. They included experiential learning and supporting analytics and resources. “Intelligence plays an important part. We must learn from mistakes and frauds perpetrated in the past,” Mr Loane said.

“We have some hard code rules, but very few because we need to be flexible and move with trends.”

There was a balance between technology and the time required to conduct investigations. It was “bad for business and customer service if you take time to investigate a claim and then declare that it’s legitimate”.

Insurers had to inconvenience as few legitimate customers as possible, “but there will be times when a legitimate claim has the hallmarks of an illegitimate claim”.

Brokers were often concerned about their client relationships if claims were under investigation.

Technology was playing a more vital role in fraud detection. Mr Loane said some people were “silly enough” to boast about insurance fraud on social media sites.

The key to fraud detection was a cost-benefit analysis and having people with the analytical capability to look below the surface and analyse claims within a timely 24-hour cycle.

Suncorp’s tools included predictive modelling – using mathematical algorithms to identify common elements in fraudulent claims; intelligence profiling, which can alert claims officers to staged accidents; risk scoring, which lowers false positives and allows triage efficiency; and intelligence management.

Mr Loane said there was little appetite for police to investigate insurance fraud, although he could pass on “a handful of briefs each week”.