ALFA estimated the sum defrauded in insurance in 2022 at 587 million euros in France, making it a major challenge for the sector. Fraud takes a variety of forms, from dishonest underwriting to the fabrication of false documents, and it also occurs at various stages of the customer journey. In this article, let's explore the different facets of insurance fraud, its financial and reputational implications, and ways to prevent it.
Insurance fraud occurs when individuals or entities manipulate the insurance system. The Alfa (Agency for the Fight against Insurance Fraud) defines it as “an intentional act, carried out by a legal or natural person, in order to unduly obtain a profit from the insurance contract.”
This fraud can occur at Various stages of the customer journey, from initial subscription to claims reporting.
Unfortunately, these actions have significant repercussions on the financial balance of insurers and, by extension, on the insured themselves, which we will discover in the rest of this article.
To take stock of the players in the insurance sector: Focus on the different insurance sectors
When you take out insurance or when you want to report a claim, it is mandatory to provide various types of documents, such as identity documents, bank details or even supporting documents such as invoices, or bonus/malus certificates.
We talk about insurance fraud when this information is manipulated in order to unduly obtain a profit from society.
There are thus two types of insurance fraud, including underwriting fraud - which occurs in particular in the KYC procedure - and declaration fraud. These are mainly Documentary scams.
Some fraudsters seek to bias the insurance underwriting process by Providing false documents. They can thus impersonate someone or even hide relevant background, such as bonus/malus certificates when taking out car insurance.
By doing so, they can benefit from taking out insurance at a lower cost. In France, it is estimated that one in ten people have already committed subscription fraud, According to a YouGov poll.
Another common form of insurance fraud occurs when claims are reported. Fraudsters falsify documents to, more often than not, exaggerate the damage caused. They thus declare non-existent assets or claim fictitious claims in order to receive compensation to which they are not entitled.
In 2018, L'Argus de l'Assurance Estimated at 2 billion euros the amount defrauded in the case of property and casualty insurance, which is everything related to fires, accidents and various risks.
As you can imagine, such figures necessarily have a major impact on the health of insurance companies. So what are they?
Financial losses, impact on premiums or even on the reputation of an insurance company. Document Fraud Has Consequences Both on the companies and on the customers. Let's see them in detail.
Insurance fraud generates significant financial losses for insurance companies. Indemnities paid fraudulently accumulate, directly impacting insurers' financial results and increasing costs for all policyholders.
Insurance premiums are directly influenced by the level of fraud within a company. The costs associated with fraud are often distributed among policyholders, causing premiums to increase to compensate for losses incurred.
Customer trust is an essential pillar of the insurance industry. When fraud cases emerge, the company's reputation is tarnished, deterring new customers and leading to the potential flight of existing customers.
In addition to the financial consequences, fraud exposes fraudsters as well as insurance companies to legal sanctions.
🎧 To listen
Discover the exclusive interview with Maxence Bizien, CEO of Alfa, at the microphone of Marc de Beaucorps, for the Finovox Fraud Chasers podcast!
To fight effectively against insurance fraud, there are many effective tools such as Software to Detect False Documents. These advanced technologies, based on artificial intelligence, make it possible to detect all false documents when subscribing but also when declaring.
The Finovox false document detection solution is a powerful ally in the fight against insurance fraud. Incorporating sophisticated algorithms, Finovox offers early detection of fraud attempts, minimizing financial losses and maintaining the reputation of insurance companies.
During the subscription and declaration processes, Finovox makes it possible to ensure that your future customer does not use false documents thanks to several functionalities.
Among Them, We Note Coherence analysis. It is the main component of our control process. Thanks to it, we check if the information provided is consistent and consistent from one document to another. We also note In-depth visual analysis and computer analysis That make it possible to detect signs of automatic generation or electronic falsification of a document.
Finovox detects fraud on 100% of documents.
Do you want to know more about our solution?
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