The use of technology and human resources in fighting motor insurance fraud

Abstract

The purpose of the study is to explore to what extent local insurance companies make use of technological devices and the human resources employed to combat fraudulent motor claims since insurance fraud is an increasingly serious problem in Malta. In Malta, insurers often take joint initiatives on common problems they face through the Malta Insurance Association. To detect and prevent fraud, Maltese insurers believe that training their employees is the most effective way along with cooperation amongst insurers and the use of technology. Insurers invest in technology in terms of data, issuing policies, managing claims, reporting and detecting fraud. This is done by making use of data mining techniques. A recent initiative which insures have devoted a great deal of investment is in the FRISS anti-fraud system which enables insurance companies to share information between them for the purposes of preventing fraud. Both the use of data mining techniques and the FRISS antifraud system constantly prove to be a fruitful investment when dealing with the identification and prevention of fraud. However, to understand the systems and methods being used by local insurance companies, interviews were conducted with several professionals in the insurance industry including the MIA, as this subject was not well researched in Malta. References to the UK market were carried out in terms of the amount of fraud detected or undetected, as no figure could be determined in the local industry due to the lack of monitoring of the situation. The issue of insurance fraud in Malta is a reality and is on the increase. Unfortunately not enough actions are being taken against fraudulent policyholders with the judicial system ii being partly to blame. Moreover, not enough is done to inform the public about fraud and this is one important aspect that needs to be taken into consideration in order to stand a chance of minimising insurance fraud. Although insufficient mechanisms are in place, the Maltese insurance industry is on the right track.