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Published 15 June 2017
The Counter Fraud team at international law firm DAC Beachcroft has devised a range of new 'dynamic' fraud detection indicators to help insurers identify fraud more effectively across motor, public and employers' liability claims. The new indicators were launched at an event on 13th June which showcased the evolution of the DAC Beachcroft Fraud Identification Toolkit.
Constructed from in-depth analysis of the information contained in the team's extensive databases, the new Dynamic Fraud Indicators overlay extra levels of constantly updated data onto existing indicators. From these, the firm's Intelligence Team has identified new emerging trends and patterns in fraudulent claims, particularly in relation to time, weather conditions, vehicle types, geographical location, and changes in claimant profiles and behaviours.
Catherine Burt, Head of Counter Fraud at DAC Beachcroft, explained: "All insurers use fraud indicators to flag claims which may be of concern. Typically, these indicators are static – a list, sometimes weighted, against which claims handlers will check the details of their particular claim. If there are sufficient indicators, they will refer that claim to a specialist fraud team to investigate further.
"Static fraud indicators will always play their part, but it is the analysis of multiple data sets which provides a more sophisticated method for detecting fraud," she said. "Insurers will be able to use the new indicators both to prevent policies being sold to known or suspected fraudsters at the outset, and to identify and defeat fraudulent claims."
A practical application of the indicators, for example in motor claims, is the identification that January is the highest risk month for staged motor accidents, with a greater proportion taking place between 6pm and midnight and on Sundays, when there are fewer witnesses on the road. This is in comparison with genuine road traffic accidents (RTAs), which occur in normal rush hour peak times. Furthermore, staged accidents tend to occur on C or unclassified roads, again away from witnesses, as opposed to genuine accidents which are more likely to occur on busier A roads, and are also six times more likely following a snow fall, compared with genuine accidents.
For public liability claims, the risk of fraud has been identified as highest on a Saturday, with fraudsters most likely to be in the 35-39 and over 65s age bracket.
Within policy fraud new indicators have also been developed, with the average distance between the policyholder's address and the accident location being characterised as eight times that seen in non-fraudulent cases.
"With the fraud arena constantly changing, these indicators will keep our clients one step ahead of the fraudster," Burt added. "The dynamic element to these new fraud indicators should mean that further fraud is detected, increasing fraud savings and reducing indemnity spend."