The study, carried out by business intelligence firm SAS, found that undetected insurance fraud was costing the UK an estimated £2.1 billion every year.
The report claims, however, that taking a proactive approach can make a big difference. The research found that 57% of firms that use business analytics had seen an increased detection rate, greater than 4% year-on-year. This compares to just 16% where no analytics solution was in place.
The study found that 89% of insurers surveyed do use some form of automated detection technologies, with 49% using advanced analytics. In revealed, however, that almost a fifth of insurers do not use any technology to assist with fraud detection.
"From the research and our experience on the ground, the message is simple: investing in advanced fraud detection and analytical technologies; making use of multiple analytical techniques and combining the results will enable an insurer to detect and prevent fraud before it happens," said David Hartley, Director of Insurance Fraud Solutions, SAS.
"The industry is waking up to the rapid growth in fraud and it's encouraging to see investment in dedicated teams and appropriate technologies."