Across the globe, insurers are waging an ongoing battle against fraud. While opportunities for fraudsters abound, new strategies and tools are emerging to combat it. In RGA’s 2024 Global Claims Fraud Survey, 83 industry insiders provide key insights into this prevalent concern and offer a semblance of hope.
Explore the survey report for deeper details
Regardless of where insurers are located globally, one issue continues to rank as a primary concern and risk: fraud. The results of the RGA 2024 Global Claims Fraud Survey bear this out.
One statistic may best articulate the concern. When asked to evaluate the current state of claims fraud, 74% of respondents report the number of cases as “the same” or “increasing” compared to past years.
Several important developments regarding fraud have emerged, shifting the landscape. The survey explored these factors, including how insurers view and address fraud when managing claims, the processes for detecting and preventing its occurrence, and the challenges most often faced when combatting fraud.
This is the second global fraud survey conducted by RGA, with the first occurring in 2017. Each focused on data from the previous year, from 2023 and 2016 respectively.
Both the 2024 and 2017 surveys focused on life and health insurance claims professionals serving in claims director, assessor, operations, and administration roles globally.
Please note: Respondents tripled for the 2024 survey compared to the 2017 version, and 60% of respondents were from the Asia Pacific region (including Australia and New Zealand), which could influence data insights and trends.
For the purposes of the survey, RGA divides fraud into three categories.
Fraud is seen as the most important aspect when processing a claim. Shining a spotlight on the scale of this dilemma, fraud impacts approximately one out of every 30 claims.
According to survey respondents, the number of fraud cases with claims is widely viewed (74%) as the same or increasing when compared to previous years. The breakdown is about even between those finding fraud increased (35%) and those reporting no change (39%).
Underwriting fraud is at 85% for those two options. However, a closer look at the numbers shows two-thirds of respondents feel there was no change, while only 17% noted an increase in fraud cases.
When pinpointing the most likely culprits, it is not surprising that most survey respondents (72%) listed consumers first. Some of the more notable examples include misrepresentation and non-disclosure, falsifying documents, and working while claiming disability benefits.
Doctors rank third at 23%, showing they also are seen as playing a significant role. Examples of doctor-related fraud include modifying medical records, colluding with patients, and ordering excessive or even false hospitalizations.
Unfortunately, the problem is not limited to those outside of the industry. Insurance agents rank second with 41%. These cases might include coaching policyholders on claim responses, validating fraudulent documents, and not properly screening clients.
Ranking fourth at 20% are others working within the industry. A few examples here include organized crime, impersonations, and fake death certificates.
Just more than 50% of respondents believe life (mortality) products remain most vulnerable to fraud. Health (medical) ranks a distant second by nearly half (27%). Critical illness is listed third (9%), although this is more than double the percent of our previous survey.
It is worth noting that the product mix offered by the respondents could have an influence on the rankings.
Instances of fraud are found to have a significant impact on the time associated with processing claims. The average end-to-end time for a claim tends to be about three weeks. Respondents note this jumps to an alarming 68 days – three times longer – when fraudulent activity is suspected.
On the surface, this may seem appropriate given fraudulent claims are more complex and require greater due diligence. When investigating such cases, claims professionals frequently consult outside parties (e.g., doctors, other interested parties).
However, insurers are cautioned to examine this more closely and reevaluate the time associated with processing such claims. Most consumers are not found to have a fraudulent claim, yet when it is suspected they are subjected to the same timeline that is three times longer. Due diligence should not be ignored, but ensuring a fair outcome and its associated timeframe are equally as important.
When claims are proven to be criminally fraudulent (e.g., identity theft, forgery), 57% of respondents either “always” or “sometimes” contact law enforcement.
If the matter heads to court, 44% of respondents report having successful prosecutions within the past three years. Life (mortality) benefit cases have the best results, with just less than half being successful.
Still, in most cases, insurers prefer to decline a claim based on non-fraud factors. The survey shows 72% of respondents will “always” or “sometimes” deny a claim for a reason other than fraud even though there is evidence to support a fraud allegation.
There are numerous reasons why this would occur:
Ultimately, insurers want to weigh the time and effort required for fraud claims against the returned value of taking action.
Not unexpectedly, the difficulty of obtaining evidence ranks as the top challenge reported by survey respondents when investigating and defending against fraud. In fact, it earns that spot by a wide margin.
Other challenges that fall a bit further back include:
Recognizing the ongoing presence of fraud, 78% of respondents acknowledged having a dedicated internal investigative team or person. This suggests the industry is making a concerted effort to address risks associated with fraud.
A financial investment is also present, as 82% report having training designed to help claims assessors recognize potential fraudulent acts.
Established fraud indicators are used by two-thirds of respondents as part of the claims process. The most popular indicators include:
Just more than half of respondents vary their detection process based on the type of suspected fraud. Some of the drivers for this are the value of the claim, simple misrepresentation, overseas death, and whether it is a life claim (vs. health).
One area that shows an opportunity for improvement is the time between the policy being issued and a potential future claim. Less than half (45%) of respondents indicate they are proactive in conducting a fraud assessment of their in-force portfolio.
AI has permeated many parts of insurance and reinsurance, and fraud is no exception. However, in this case, AI’s role presents a bit of a paradox.
On the one hand, AI empowers fraudsters to perpetrate their schemes. The most frequent occurrence of AI-related fraud involves falsified documents (48%), such as medical records and death certificates. Other types, such as deepfake photography, AI-assisted diagnosis, and voice cloning are considered not quite as concerning, at least not yet.
On the other hand, AI gives insurers advanced tools to identify and combat fraud. One-third of respondents noted they use expert systems and machine learning tools for fraud identification. They also use blended data sources, meaning a mix of internal and external, to feed these tools.
About two-thirds of respondents (68%) believed fraud will increase over the next three to five years. Another 19% felt there will be no change over that timeframe.
The rationale behind this view is driven by:
The survey proposes some suggested best practices all insurers should embrace, regardless of their location:
