Insurer is detecting more fraud in commercial lines

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AXA is planning to invest a significant amount of time and money to tackle commercial lines fraud in 2015.

Global chief fraud control officer Richard Davies told Insurance Times the insurer was detecting more fraud in commercial lines as organised fraudsters knew the industry did not share data in commercial lines to the same extent as personal lines.

Davies added that there are also fewer tools available to detect fraud in commercial lines than in personal lines. Additionally it can be easier for commercial fraudsters to escape detection by setting up multiple trading names.

Davies added: “[There has been] a move away from fraud in personal lines into commercial lines, particularly in the claims space. The abuse of motor trade and motor fleet policies over the last 18 months is an indication of where we need to put our efforts in future.

“[Tackling commercial fraud] has not been that much of a focus for the industry. We do not have a shared database of commercial claims. That indicates how much we need to do in this space.”

Personal lines techniques

Davies said vast majority of records being entered into the Insurance Fraud Register (IFR) were from personal lines, because that was where data was available.

AXA’s plan to tackle commercial fraud will involve developing its data capability and applying some of the same techniques already used in personal lines fraud detection, such as credit checks, using other industries’ anti-fraud databases and identity verification systems.

It will also run tests around commercial fraud detection and will consider hiring more staff to its underwriting fraud team.

“I don’t know how much it will cost us, but I do know the group is committed to what could be a significant investment to deal with the problem,” Davies added. “By managing the book this way we will help the honest customers by keeping premiums down.”

Brokers’ role

Davies said brokers played an important role in helping to detect commercial lines fraud, but added that not all brokers’ fraud detection tools were as sophisticated as those employed by insurers.

He said: “We are probably at the relatively early stage of conversations. What we want to do with our broker channel is to deliver to them the tools they need to make good quality decisions rather than say to them: ‘develop it yourself’.”

On the personal lines front AXA will continue to maintain its focus on claims fraud, but will invest more on insurance fraud detection at the point of sale.

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