Fraud is no match for technology in the autonomous era


As a society, we are becoming increasingly inter-connected at an extraordinary pace, with driverless cars just round the corner. Adam Gooch, commercial director, Insure Telematics Solutions, argues that the more connected we are, the more successful we are at fighting fraud.

We live in a world where we can live stream each other our locations, order almost anything with next day delivery with our voices, and instruct robotic personal assistants to turn up the heating in our homes.

This world of interconnectivity, which offers great benefit to our everyday lives, relies on huge amounts of communication and data transfer between each device, network, and user.

There is lots of fear mongering surrounding this increasing interconnectivity with warnings of threats to our privacy and personal security. It is rare to see stories highlighting how certain technologies are protect us from dangers such as fraud, something that has a big impact on all of our pockets, whether we are a direct victim or not.

As research by the Centre for Counter Fraud Studies showed, fraud is a phenomenal problem, and costs the UK alone £190 billion (€212.93 billion) every single year: PwC’s 2018 Global Economic Crime and Fraud Survey finds that 49% of global organisations say they’ve experienced economic crime in the past two years. While some fear that being so connected can put us at risk, in reality we can now isolate fraudsters quicker than ever, and tackle the problem head on.

Technology counters fraud

The fact of the matter is that there are now countless emerging technologies that can impact fraud. For example, the introduction of driverless cars will make a huge difference for insurers looking to get a comprehensive and detailed picture of risk.

Further, the sheer amount of people attempting to make fraudulent claims on their car insurance may ultimately be eliminated if driverless cars become the norm. It is hard to lie about the cause of an accident if the driver hasn’t had a significant role to play in its execution.

While we await the rise of autonomous cars, there are still ways to fight the ‘crash for cash’ schemes that cost the UK £336 million (€376.49 million) a year. Telematics has emerged in the last decade as a fail-safe way to detect and prevent fraud on a mass scale. Just like driverless cars, telematics can be used to understand and analyse driving data to help determine when a claimant is lying.

A single recent incident we dealt with could have cost the insurer we were working with up to £40,000 (€44840.06) without our intervention and insights. When a policyholder takes out a ‘blackbox’ insurance policy through which monitors how the car is driven, the insurer can refer to its blackbox provider for data analysis after an accident.

Evidence doesn’t lie

In this instance of fraud, we were able to determine the fact that the policyholder and two of the claimants knew each other, as policyholder’s blackbox showed that the person had visited each of the claimant’s homes in the days before the incident. Also, they had lied about how the collision had occurred. Further data analysis showed that one of the claimants had a history of being involved in an organised crime network or fraud ring.

A blackbox collects driving data, which is, in part, used by the insurer to determine how an accident occurred and can lower premiums too if its evidence shows the policyholder is a safe driver, rather than simply basing the costs on factors such as age or address. The blackbox also works to eliminate fraud, preventing honest drivers from being affected by rising premiums through fraudsters living in their area.

We have long worked on establishing an advanced technological model to ensure the data we collect is incredibly accurate. People are often surprised to hear we worked with Microsoft Azure (see video below) to develop a unique algorithm based on a combination of AI and machine learning. Exciting technology does not always need to be limited to the development of drones and robots.

In the world of insurance, technology is having a steady impact on fraud. Insurers are waking up to the different ways in which we can assess and access information, and are heading up technological developments, rather than shying away from them.

Telematics will be just the tip of the iceberg in terms of how technology will come to fight and eliminate fraud, but for the time being, it is one of the only developments that utilises the potential of the digital age to really make a difference in the war on fraud.

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The author of this blog is Adam Gooch, commercial director, Insure Telematics Solutions

Published on July 31st, 2018


ITS Seminar - The Benefits of Telematics

The CII recently played host to a seminar in partnership with Insure Telematics Solutions, discussing the benefits of telematics within the insurance industry.

The event saw an esteemed panel of speakers, who were gathered to talk about Insurtech, fraud prevention and innovation, in addition to sharing their predictions for the future of insurance in the age of the connected car and AI.

The panellists included Andrew Bennett, CEO of Insure Telematics Solutions; Neil Mercier, Head of Motor Insurance at AXA Insurance; Caroline Currie, Sales Director at Autoline Insurance; Danielle Head, CEO at WNS Assistance; and Paul Wainwright, partner at Browne Jacobson LLP.

The seminar was expertly hosted by Stephen Cole, former BBC journalist and Chairman of the Institute of Diplomacy and Business.

The panel began with a discussion on the use of telematics in the ongoing fight against fraud, with a particular focus on “crash for cash” scams and loss mitigation. The panel emphasised that telematics is not only helping to streamline the claims process, but the level of data that is instantly available at the point of the crash is also being used as an important validation tool as well. Claims handlers have the ability to build an accurate, real-time picture of an incident free from human bias, with the available data being used to resolve complex liability disputes and detect fraud at the earliest possible opportunity. These facets are especially important should the claim go to court, as information gathered from a telematics box at the point of crash provides near pinpoint accuracy. Paul Wainwright noted that there are also very few legal challenges to black box evidence, with the technology now accepted as a “digital witness”.

Telematics works by ensuring an insurer can provide the “right rate for the right risk”, as Andrew Bennett succinctly phrased it, with comprehensive data being gathered to enable an insurer to offer a policy and price tailored to the individual’s genuine lifestyle and driving ability, as opposed to a self-reported questionnaire.

With telematics policies most prevalent amongst millennials and the under 25’s, safety formed the basis of much of the panel’s discussion. Autoline’s Caroline Currie provided an insight into telematics from a broker perspective, observing that 90% of telematics policies are in fact sold to the parents of young drivers who are concerned about road safety and inexperience. Telematics can offer young drivers an insight into areas for improvement, and help establish good driving habits for life.

For the final part of the seminar, talk turned to AI, connected cars, and the recent introduction of the new GDPR guidelines. Insure Telematics Solutions have been at the forefront of AI innovation in telematics, partnering early on with Microsoft Azure to develop a comprehensive crash algorithm. With machine learning, each incident recorded adds to the algorithm’s ability to detect genuine accidents, and filters out variables such as door slams and potholes to build a detailed picture of driver behaviour.

Rounding off the discussion, the panel turned their attention to driverless cars and the future of the motor insurance industry. The advent of driverless cars poses an interesting question for insurers in determining fault, as fully autonomous vehicle accidents could be considered a product issue, as opposed to personal liability. Neil Mercier at AXA observed that the switch to connected cars will also be a gradual process, with a “mixed car park” of traditional and driverless cars bringing new challenges for insurers.

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Telematics - Fighting Fraud with Technology

Car insurance fraud is a consistent, and troubling, problem within the industry...

The rise of ‘Crash for Cash’ schemes has been making headlines for years, and exaggerated claims have repeatedly led to losses for insurers, which are then inevitably passed on to customers. The prevalence of fraud has meant that not only do customers suffer from higher premiums, but insurers are also less inclined to trust their customers and often resort to strict criteria such as age or postcode to determine the cost of premiums.

The car insurance industry has long avoided embracing the innovations and advances that have slowly taken over our lives. As we switch to unlocking our phones with facial recognition systems, and running our personal lives through the support of omniscient digital assistants, it is surprising to note that little of the same progress has been made in the insurance industry – until now.

Rather than simply mistrusting certain ‘types’ of customer, the motor insurance industry has finally embraced the development of technology and developed innovative new ways to fight fraud.

One big and prominent development in the car insurance world is telematics. The rise of telematics motor insurance is a complete game changer, and the progress we are still making in terms of developing state-of-the-art technology within telematics insurance should not be underestimated.

Simple cases of ‘soft fraud’, wherein consumers provide or verify outdated or incomplete information, are now much harder to carry out under a telematics insurance policy. You can’t lie about where you live, because a telematics device will show your car parked in your neighbourhood every night. And more importantly, where you live will become less important as the policy will be decided based on your decision to have your car fitted with a telematics device, and the subsequent data collected about your driving habits.

Honest habits

Unfortunately, advances in our ability to detect fraud do not always work to prevent consumers from attempting to gain cheaper insurance premiums by omitting information. One recent case for Insure Telematics Solutions saw an insurer save approximately £25,000 on a claim. Following an incident, we received the data from the telematics device and after some analysis found that the driver’s habits were very similar to that of a delivery driver. Most insurers do not cover delivery drivers, so we reported this information back to the insurer, who checked in with the customer to ask about his occupation and the incident in detail. What they found out was just as we had suspected – the customer in question had indeed been in an accident, but had failed to disclose the fact that he was a takeaway delivery driver.

This case is not unique, and illustrates how telematics – which began as a simple and natural consequence of data collection – has advanced to become a tool for fighting insurance fraud. As a result, in cases such as this one, not only did the insurer save a lot of money, but the people local to the driver weren’t tarnished with the effects of a negative influence on their postcode.

Of course, telematics is not the only way in which motor insurance has begun to incorporate technology in order to fight fraud.  The data that we can access is growing indefinitely, and social media has become an integral tool for everyone – businesses and individuals alike.

Technology does not have to be particularly complex in order to have an impact on insurance fraud. It is therefore refreshing to see the motor insurance industry engaging with the incredible and advanced tools we have developed to manage simple cases involving fraud.

Telematics works to develop a relationship between the insurer and the customer, and the customer and their driving. The old relationships between consumer and company have eroded, and the lines have been blurred with the rise of communication platforms such as Twitter.  Companies now have a presence and are often required to have a personality. In the telematics world, allowing drivers to access the data we collect on them means that they are less likely to be inclined to commit fraud, and more likely to engage with their own driving habits in order to become safer and better drivers.

In turn, the claims process has been streamlined. The development of an advanced algorithm with Microsoft Azure, for example, has allowed Insure Telematics Solutions to streamline the claims process so that a combination of machine learning and AI works to detect whether an incident is true or not, and inform the insurer immediately. Developing the tools to streamline the claims process has allowed us to engage with insurers and their customers, in order to aid motor insurers in their goals to join the modern, interconnected age of technology.

Fraud in the motor insurance world is now under threat due to the motor insurance industry’s embrace of the existing technology, such as social media and data analytics, and the development of cutting-edge predictive modelling and crash algorithms. Telematics, if given the opportunity, could continue to be a phenomenal development against fraud, and a great technological advance as a whole. 

Adam Gooch, Insure Telematics Solutions

Published Date:

06 February 2018