Here’s a controversial statement: insurers want to pay claims—genuine claims, that is.
Genuine claims are key moments of truth for consumers. They demonstrate that insurers are there to protect policyholders from unexpected expenses in exchange for a reasonable monthly premium. It’s no surprise that claims costs significantly impact an insurer’s financial performance, often comprising 60-70% of Gross Written Premiums (GWP) (Insurance Capital Market Research).
While insurers focus on paying legitimate claims, fraud remains a persistent and costly issue, quietly eroding profitability. Considering insurers generate billions in GWP annually, even a small improvement in loss ratios can lead to substantial financial gains. This is where Celebrus can help tackle the growing challenge of fraud.
Real Issues Insurers Face
For every detected case of fraud, an equal amount goes undetected, making it clear that traditional fraud prevention methods are no longer enough. The shift toward digital channels has exposed insurers to new types of fraud, and without true live-time solutions (in milliseconds, not hours or days), they risk falling behind.
Serpil Hall, Head of Fraud at Celebrus, points out, “In discussions with insurers, a number of obvious use cases for Celebrus are immediately evident. And it’s not just identifying and preventing the fraud at the point of policy inception / claim registration; it’s also about preventing those users that you’ve identified as fraudulent—or where you’ve cancelled or declined their insurance previously—from taking out a new policy with slightly different personal information. We can solve this very real issue for insurers.”
The Cost of Fraud
Estimates for the cost of claims fraud vary considerably, but Insurance Europe—a key insurance and reinsurance federation—estimates it at an astonishing 10% of claims costs. To put that into perspective:
- AXA’s Losses in 2022: Axa wrote €51.6B in Property & Casualty GWP, with a loss ratio of 69.6%, resulting in €35.9B paid out in claims. With a 10% fraud estimate, AXA lost a staggering €3.6B to fraud.
- State Farm’s Losses in 2022: State Farm wrote $76.6B in premiums with a 67.1% loss ratio, resulting in $51.4B in claims paid. With fraud estimated at 10%, they may have lost around $5.1B to fraud.
- Aviva’s Losses in 2022: Aviva wrote £20.6B in GWP with a 72.6% loss ratio, leading to £14.95B in claims paid. Fraud could account for £1.5B of that.
Despite the financial impact, many insurers cannot accurately estimate fraud losses, with some preferring not to disclose the figures at all.
Existing Solutions: Too Reactive
Many insurers have already invested in systems to combat fraud. However, many of these solutions are reactive, focusing on offline, batched processes that run overnight. These systems only target known fraud, and data is often processed externally by anti-fraud software providers, with only the risk score delivered to the insurer. This leaves insurers with limited insights into the underlying data, and as a result, they miss out on the opportunity to build more sophisticated fraud models using rich data sources.
As more consumers prefer online self-service, insurers are increasingly exposed to new types of fraud that existing systems struggle to address. Without true live-time solutions, these systems cannot preempt or prevent fraudulent activity at the point of quote or claim.
Celebrus: Your Missing Lynchpin for Fraud Prevention
Fraudsters take advantage of online invisibility, but in the digital space, users leave significant digital footprints. Celebrus uses those digital footprints to form the basis of better evidence for all current and future visits.
To combat fraud in digital spaces, brands need to rethink their strategies. The old reliance on static scores from outdated platforms and systems that take 3 - 6 months to update models are no longer enough. You need better data and a solution for digital identity that builds profiles over time, regardless of login status. Celebrus delivers true live-time, actionable insights, empowering companies to stop fraud before it even happens.
Key Benefits of Celebrus
- Live-Time Insights: See suspicious activity as it’s happening; Celebrus data helps spot fraud in live time (40 milliseconds!) for smart intervention and immediate reactions to prevent fraud
- Digital Footprints: Build detailed profiles using online activity—no login needed.
- Reduced False Positives: Reduce false positives for existing customers by building better evidence and profiles.
- Seamless Integration: Works alongside your existing platforms, layering in live-time digital identity data to strengthen your fraud detection processes without disrupting your existing environment.
Evaluate Your Fraud Costs
If you’re unsure how much fraud costs or you are struggling to identify unwanted users at policy inception, it’s time to re-evaluate your digital data capture capabilities. A 1% reduction in your loss ratio would make you shine in the eyes of your Board and shareholders and drastically increase ROI. By integrating Celebrus into your fraud prevention strategy, you can reduce loss ratios, improve accuracy, and ultimately save billions.
Now is the time to evaluate how much fraud is costing your business and take proactive steps to protect your bottom line.
Contact us today to learn more!
