Insurance fraud: definition and figures
Insurance fraud is “an intentional act, carried out by a legal or natural person, in order to unduly obtain a profit from the insurance contract”, according to the definition of the Insurance Fraud Agency (ALFA).
This amount has an impact both on customers, but also on insurers who must increase their prices to compensate for the lost business volume.
Insurance fraud includes:
- compensation fraud, which involves any deliberate attempt to obtain compensation in violation of the insurance contract;
- insurance premium fraud, which consists of taking out new insurance to receive premiums that are not due to us;
- claims fraud, which concerns any simulation of a claim which aims to obtain compensation for an accident that did not take place;
- non-payment of premium fraud, which refers to any due date which is voluntarily not paid by the insured;
- fraud due to non-compliance with policy clauses;
- damage fraud, which qualifies a loss which did not take place, which was exaggerated in order to receive higher compensation, or even a loss intentionally caused…
What is the impact of these frauds on insurance companies?
According to the report of the Commission of Inquiry relating to the fight against social benefits fraud published in 2020, in 2019, property and liability insurers would have suffered 368 million euros in fraud. The amount relating to personal insurance fraud reported in this same report was 50 million euros. Maxence Bizien, director of the agency fighting insurance fraud, believes that this figure is actually higher, because a low rate of personal insurers responded to the survey.
The cost of fraud directly impacts the cash flow of insurance companies which, to limit their debt, then increase the price of their products and, in fact, the amount of their customers' contributions. To get an idea, according to the French Insurance Federation (FFA or France Assureurs), the multi-risk home contract has increased by 34% in 10 years, fraud being one of the main causes of these increases.
Furthermore, fraud also has consequences on the reputation of an insurance company and, in fact, its ability to attract new policyholders and maintain its business.
The increase in insurance fraud figures from one year to the next can be explained by two factors. The first, rather negative, indicates that the number of fraudsters is increasing. The second, more positive, proves that the number of frauds detected by insurance companies is increasing, in particular thanks to the tools that are put in place.
What anti-fraud software to protect against insurance fraud?
As an insurer, different types of tools can be implemented in your company to fight against document fraud. These tools adapt to each stage of your policyholders' journey, from their subscription, to the declaration of claims, including the payment of their premiums and allow you to detect false documents digitally and thus avoid fraud.
Let's imagine here a case of registration, with the use ofa strong authentication solution using official identity like ShareID combined with SaaS fake document detection software powered by artificial intelligence, like Finovox.
Verify the identity of subscribers with ShareID
Among the first documents to analyze when taking out insurance is the identity card. ShareID is a French authentication-as-a-service (AaaS) solution, which allows you to quickly verify the authenticity of identity documents and the identity of users.
⚙️ How it works ?
The user captures a video of their identity document. He is then asked to take a capture of his face – smiling – with – his smartphone. This information will make it possible, first of all, to ensure the authenticity of the identity document. This will also make it possible to deliver a valid and reusable digital identity, without ever storing any personal or biometric data.
✨ What makes ShareID unique:
ShareID has developed algorithms for the authenticity of identity documents – in partnership with the French National Gendarmerie – and makes it possible to reproduce the equivalent of an identity check carried out by the authorities in real time and without storing personal data. , nor user biometric data. This patented technology is able to analyze standardized documents from more than 120 countries and passports from around the world and its accuracy rate is 99.9%.
Detect fake documents with Finovox
Second step when subscribing to insurance: submission of documents such as proof of address, tax notice, RIB, etc. During this step, using fake document detection software like Finovox is a valuable asset. Our SaaS solution allows us to meticulously examine all documents and identify any possible alterations on the document or documents that were created from scratch. These analyzes are carried out using our statistical tools but also using AI. This also works when making compensation claims. The invoices sent to your insurance are then analyzed by the solution, in order to detect any falsification.
⚙️ How does it work?
After dragging and dropping the documents into our solution or using Finovox API, these are analyzed one by one, in order to determine if they are original files or if the latter have been falsified and in what way. This analysis is possible thanks to our consistency analysis algorithms, but also visual, computer and statistical analysis as well as our comparison tools which have been fed from external databases. These multiple analyzes make it possible to not miss any area of the document that has been falsified, created from scratch or modified in order to identify fraud... And thus, to avoid it!
✨ What makes Finovox unique: we analyze 100% of your documents, of all types, in all languages and in any format.
Falsifications are detected using advanced machine learning algorithms owned by Finovox, a French company.
An example to see it more clearly:
Mrs. F. takes out insurance with Assurance A. When subscribing, she provides documents, including: her identity card, a registration certificate, her driving license and a statement of insurance information. After submitting your file, your identity card is analyzed by ShareID, which carries out a complete verification of the authenticity of the document. On the integrated solution, Mrs. F. must also take a video of herself to validate her identity and thus avoid any theft.
Meanwhile, Finovox combs the other documents to detect any fraudulent manipulation.
The analysis is complete! ShareID detects an anomaly with Mrs. F's identity document. It appears to have been usurped. ShareID mounts the return of AI to Insurance A. The Finovox solution, for its part, found multiple modifications in the structure of Mrs. F's insurance information statement. It is indicated that the data relating to the percentage of bonus/malus was modified in Photoshop. Our tool also allows you to go back into the modification history of the document and allows you to know how and how many times the document has been modified.
By combining these two tools, you allow your teams to focus on managing fraud, rather than detecting it. In this scenario, it seems that Mrs. F. wanted to divert money from Assurance A.
Use a combination of tools like ShareID and Finovox represents a considerable saving of time and above all, it makes it possible to sustainably fight against document fraud, identity theft and drastically reduce the financial losses associated with it.
To learn more about these solutions and how to implement them in your business, contact our experts and request a demo!
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