The analyst said insurers must reassess their fraud strategies and how technology is currently being utilised to combat the growing threat. The UK Insurance Fraud Bureau believes P&C insurance fraud costs $3bn a year - adding $70 to every policyholder’s premium.
The Ovum report said an estimated 10%-20% of insurance claims are fraudulent, with potentially less than 20% of such fraud being detected. It added that increased pressure on profitability, intense competition and the increasingly sophisticated tactics of criminal fraud networks all meant that it was imperative that insurers tackled this issue.
Charles Juniper, principal analyst of insurance technology at Ovum, said: “The nature of insurance fraud and the technology to combat it are in constant flux and there is no single ‘silver bullet’ technology that can fully address the issue of complex fraud. Insurers should therefore use a range of technologies within an integrated system as part of a comprehensive strategy to tackle fraud.
“The increasing pressure to respond to the fraud threat, together with the need to reduce costs and offer a competitive proposition in difficult market conditions, means insurers will invest significantly in these emerging fraud technologies over the next 36 months.”