In many insurance companies, as much as 90% of the workforce is now working from home. Without visibility, that makes it easier than ever for them to commit fraud.

Staff have the ability to photograph confidential data from their computer and then sell it or blackmail a company to keep it private. Where companies have outsourced offshore they’ve mandated that the outsourcer forbid staff to bring phones into the office to prevent this type of fraud. Now these staff are having to work from home this can’t be enforced.

Vulnerability to hackers and cyber fraud

Staff are also vulnerable to outside actors looking to commit cyber fraud. Very few companies have the technology to ensure the same high level of security when staff work from home as they have in the office. Because the shift happened so fast, and at such a large scale, most employees are using their own computers and network connections to work from home. These are less likely to have robust security such as encryption and secure passwords, leaving them vulnerable to outside hacking attempts. Sensing the opportunity, ransomware attacks have become much more prevalent over the last year. The going rate for ransom demands in the US is now between $10M and $40M.

Pressure to skip due diligence

While insurers are adjusting to the new world order, commercial claims and enquiries are spiking. Business owners want to understand the limits of their business interruption cover, as well as public liability if a customer contracts COVID-19. A huge proportion of the people who are now working from home have had to buy office or IT equipment and need business property insurance.

To keep up with demand, insurers have needed to shift as many interactions online as possible. Those companies who already had advanced digital underwriting, claims or administrative processes have fared better than those who are still dependent on call centres and in-person claims but everyone is feeling the pinch.

Under pressure, it’s more likely that staff will miss a red flag for fraud or waive certain requirements that usually act as a check. For example, an insurance company that usually requires a physical signature from their client might accept the digital alternative. This makes things easier for customers, but also increases the likelihood of fraud. It’s also harder to verify identity, allowing fraudsters to falsely claim that they’re a client holding a policy with your company and instruct claim payouts to be sent to a new account—theirs.

How can technology help commercial insurers crack down on fraud?

Machine learning is the most powerful tool for fraud prevention.

Insurers who are still running legacy systems are dependent on manual processes. Data is captured in paper forms and then entered and stored in one of several databases—or more often the forms are just scanned and stored as an image so the data is inaccessible.

Different systems are often used by each functional team. Work flows around the office going from role to role, new business team, administration staff, claims managers, product managers, underwriters, actuaries, etc. Each role has historically been siloed to the point of specialisation. The effect is that none of these people can pick up larger patterns that might indicate fraud.