The insurance fraud landscape is different in every continent, region, and country. Rules, regulations, and behavior of people affect fraud scenarios, and cultural specificities shape the way fraud handlers deal with the issue of fraud. All these factors combined form the national fraud landscape. Encountering different fraud landscapes creates the opportunity to leverage existing knowledge and enrich it with new experiences, which enable the further development of the solution and services. The collaboration with this Latin American branch a global insurance company highlighted the importance of mutual learning, and the educational role companies such as Shift Technology can fulfill. Force^TM was implemented in the automotive line of business, where the execution of the solution was a big success. In addition, the trainings and workshops organized by the Shift Technology team helped the local team to formulate a systematic approach to tackle the issue of insurance fraud in this Latin American country.

The force of Force^TM

Throughout the years and through working with numerous clients, Shift Technology has developed a robust fraud detection solution. This success is derived from extensive research and the collaboration with over 35 partners. In every new collaboration Shift Technology leverages its expertise and best practices, whilst gaining valuable insights from the local fraud handlers.

Research and experience has shown that there are several core pillars that an AI-powered fraud detection should integrate to tackle the issue of fraud. The solution requires, on one hand, a high degree of adaptability, whilst on the other hand the power to incorporate a broad range of fraud scenarios. However, apart from providing a strong fraud detection solution, it is also important to provide a platform for knowledge exchange, specifically in the collaboration with this Latin American partner. This creates the opportunity to discuss best practices, help the internal fraud handlers formulate processes, and the possibility for the external service provider to customize the solution to the needs of the client.

Force^TM is built on a SaaS+ platform which means that the Shift Technology solution is adaptable, and each client is supported by a team of experienced and dedicated data scientists. This makes it easy to implement changes to adapt the solution to every client’s specific needs. Additionally, it is possible to incorporate a wide range of fraud scenarios, some are taken from the standard Shift fraud library, whereas others are customized to the client’s local environment. This is a prerequisite to provide a cohesive approach to fraud detection, especially for a complex fraud landscape such as the one in this Latin American country. The workshops and trainings organized by Shift created an open platform for knowledge exchange, making it possible for Shift to identify the fraud handlers’ obstacles to putting in place best practices and processes. These were subsequently used as starting points for further discussions and collaborations, eventually helping the client formulate procedures to ensure consistency in their fraud handling activities.

Results

After 12 months of collaboration, the client received nearly 3,000 alerts. Force^TM maintained a consistent hit-rate of around 80%, implying that 80% of all fraudulent alerts sent were deemed suspicious by the local fraud handlers.

“The speed and ease with which the Shift solution analyzes data makes this difficult job seem simple. Additionally, the UI is very user-friendly, making it easy for the team to work with!”

–Fraud Handler

In 2016, Direct Line Insurance released the 3rd edition of the car insurance fraud barometer, stating that six out of 100 car insurance claims in Spain are fraudulent. They suspect that auto insurance fraud costs Spanish insurers approximately €1.2bn per year. In the same year Shift Technology started a collaboration with the Spanish branch of a large insurance company, initially focusing on tackling fraud in the automotive section, and currently being used throughout numerous lines of business.

Shift for the Win

The initial phase of this collaboration was a month-long benchmarking challenge, where Shift Technology outperformed the other fraud detection solutions by achieving a hitrate of 75%. In other words, three out of four alerts sent through the platform were deemed suspicious by the client’s expert team of fraud handlers. Thanks to the success of the pilot phase, the client opted to go into production, using Force^TM in real-time to catch fraudulent behavior.

“With the Shift interface, in less than three minutes, we see exactly where we need to focus our investigation of the case. The information is very clear.”

-Claim Handler

Communication and Adaptation

In Spain, new fraud scenarios pop up every week and it is imperative that a fraud detection solution is continuously updated to include the latest fraud trends. To facilitate this, a fraud detection solution needs agility and flexibility, combined with a highly responsive team. Agility and flexibility are inherent in Force^TM since it is offered as a SaaS+ solution. Additionally, to properly model the local fraud landscape, Shift Technology matches data scientists to the clients that speak the same language and understand the national fraud environment. An experienced and dedicated team, combined with the positive aspects of the SaaS+ model ensures that the solution is tailor-made to accurately approximate the national fraud culture, including all its specific fraud scenarios.

Shifting Results

More than half a year into the production phase the results have been impressive. Since going live, over 1,000 Force^TM driven alerts have already been proven fraudulent by the Spanish fraud detection unit, significantly increasing their conversion rate; that is, the percentage of suspicious alerts proven fraudulent. Operating a fraud detection solution in a live environment is starkly different from treating historical data; there is a continuous inflow of new data, and a constant output of processed results. Thanks to the successful results in the automotive line of business, the client proceeded to implement Force^TM in numerous other lines of business.

The collaboration with this local branch of a large international insurance company marked Shift Technology’s debut in the African market. The African insurance market is starkly different from the European and APAC insurance markets, where Shift Technology was already operating. Interest in the African market potential is increasing rapidly, making it a highly dynamic and vibrant environment. This creates numerous opportunities for InsurTech startups to positively contribute to developments in the region.

Complete information

The strength of technology-driven fraud detection solutions is derived from their ability to process large volumes of data. The general rule is the more data the better, which consequently improves the accuracy and effectiveness of the analysis. At Shift Technology uses numerous data sources, both internal and external, to help insurers identify fraudulent behavior.

During the initial phase of the collaboration with this African branch it became apparent that there were several issues with regards to the quantity and quality of the available data. Information was often inaccurate or incomplete, which is problematic since data is a crucial factor in replicating a fraud unit’s deductive reasoning.

Though Force^TM was still very effective, it was clear that with a higher volume and quality of information the collaboration would yield even more outstanding results. The Shift Technology team discussed the importance of information with the local team, explaining how Force^TM analyses it and the ways in which it contributes to better fraud detection. After this workshop concerning data, the local branches started providing more, and better, information for the solution to analyze. The exchange of information and best practices between the Shift Technology team and the local team have contributed to the successful implementation of Force^TM.

“We are very satisfied about our collaboration with Shift. The results exceeded our expectations given the limited amount of data we had available”

–Claim Handler

Present and Future Collaboration

Shift is currently receiving around 10,000 claims per year from this African branch. Force^TM has proven to be an extremely effective solution to decrease the insurer loss ratio resulting from fraudulent activities. Apart from achieving outstanding results for the client, the partnership also enables Shift to discover and participate in a high growth insurance market characterized by a highly dynamic and vibrant environment. After the success with the African branch, Shift is currently also working with other branches of this international insurance company.

One Association’s fight against fraud

The client, a nationwide anti-fraud association, has led its country’s inter-agency fight against insurance fraud for over 25 years. The client’s aim was to use its influence and aggregate data to establish fraud detection and best practices awareness amongst its 100 members. By doing this they hoped to enhance fraud detection methodology through introducing and improving technical documentation and statistical analysis.

Call to Arms

Over the years, the client established its authority with regards to detecting individual fraud patterns, and shared this information with its members. However, recent developments led to the rise of large-scale organized fraud and money-laundering schemes within the industry affecting multiple members.

To combat this new fraud landscape, the client sought a unified solution that would be capable of integrating numerous data sources coming from its diverse range of members, and quickly identifying networks of fraudulent behaviour operating across the market. The solution would also need to pass rigorous confidentiality standards and adhere to the local data protection laws.

A Force- TO BE RECKONED WITH!

Seeking the best solution on the market, the client initiated an RFT that included providers big and small, established and emerging. After being placed on the shortlist, Shift Technology’s fraud detection solution, Force^TM, won the tender. In addition to technical capabilities and innovative power, this decision was also based on the competitive pricing and a superior offer tailored specifically for the insurance industry.

After three months following the preliminary workshops, Force^TM was ready to be put to the test. At the end of the pilot, the client was given full access to the interface and the results, which were based on an analysis of over 150 million lines of data, spanning across 13 million claims.

All in all, over 3,000 new cases of potential fraud were detected, the highlight of which was a massive organized crime network that involved a very high number of claims and affecting the majority of the members in the association.

Shift to Success

In five short months of post-pilot production, Force^TM yielded a strong positive ROI and the project fostered collaboration between members that had previously been reluctant to cooperate. In addition to financial gains, the client continues to benefit from the seasoned expertise of Shift Technology’s dedicated Data Science team which recurrently integrates member feedback to enhance the detection model. Because of the project’s success, the client now sends Shift Technology over five million claims per year to pass through Force^TM for analysis.

“Shift Technology has helped us uncover fraud schemes that, even just one year ago, we hadn’t imagined existed. Thanks to Shift Technology’s solution, we now have a weapon against the fraud networks that have been running rampant in our country for years, siphoning off millions of euros from our members.”

-Association’s Director of Insurance Fraud

A global insurance company, active in over 60 countries, including Asia, where they offer a wide variety of insurance coverage ranging from the traditional motor, household, travel and health insurances, to cyber risks, art, and personal accidents.

Prior to working together in regions with a high fraud prevalence, the client sought to determine whether Force^TM could be applied to geographies where motor-insurance fraud and its detection were less developed. Known for its law-abiding culture, the client proposed an Asian country as an ideal location to challenge Force^TM.

Discovering a Market

“There is nothing to detect”- A general premise amongst insurers and fraud detection companies in this Asian country. One of the main drivers for this perception is a result of nation’s above average general wealth. The majority of the population finds the fully comprehensive insurance policies affordable, and they are therefore less likely to engage in this type of opportunistic crime in comparison to less affluent countries. Secondly, punishment for insurance fraud in this country is one of the harshest in the world: extended incarceration and massive fines are not unusual. Recent examples include a six-year imprisonment for a scam of over $1million, and more than three years for orchestrating motor accidents. These punitive factors further contribute to the notion that insurance fraud, or rather fraud in general, is exceptional in this Asian country.

“The Shift Technology team is very proactive and quick to respond to questions and changes, hereby really fine tuning the solution to our specific needs.”

-Fraud Handler

Cultural Calibration

AI-powered fraud detection solutions, such as Force^TM, are often constructed using a combination of complex algorithms and fraud scenarios. Fraud scenarios are highly dependent on the country, line of business, and even the preferences of individual insurers. After years of experience in the field the Shift Technology employees are truly experts in the topic of insurance fraud. Through organizing multiple workshops and maintaining an open communication channel best practices can be exchanged between both parties. In turn, this allows for the proper calibration of such fraud scenarios, hereby synching the algorithms to reflect the local culture, hence increasing accuracy and effectiveness.

The pilot phase of Shift’s collaboration with this branch commenced in early 2015, and lasted four months. Shift quickly realized that the Asian insurance fraud landscape was radically different from landscapes encountered elsewhere. However, Shift Technology’s highly configurable library of indicators has been designed to adapt easily and efficiently to any new fraud context. This makes it possible to adequately adjust the model to increase its accuracy and effectiveness for any market and every client.

Results

With a strong positive ROI and a hit rate of 80% the project was a success for both Shift Technology and the client. Since the pilot, this Asian branch sends Shift almost 30.000 claims per year. Additionally, since officializing the partnership with this branch, the use of Force^TM has been expanded to cover other lines of business. Not only has this collaboration led to positive developments with other insurers in this Asian country, it has also sparked further partnerships across the Asian continent.