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INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!

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INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!

David Hartley, Director Fraud and Financial Crime Practice, SAS EMEA & AP

Insurers are embracing digital to meet the demands of the modern consumer. And of course there are obvious benefits to them from less costly, more streamlined interactions with their customers. The trouble is that digitisation comes with a major health warning: unless insurers put suitable measures in place, they risk being exposed by increasingly sophisticated fraudsters and falling prey to one in around every 10 claims being fraudulent.

Since the turn of the millennium, ‘brochure web sites’ for insurance companies have been replaced with ecommerce platforms that can transact new business directly with customers online. More recently we have seen the rise of the insurance aggregator, allowing customers to enter their insurance needs into a website and in seconds receive quotes from potentially hundreds of insurers. It has improved choice and made the marketplace more competitive.

Fast forward to today and insurers are digitising more of the insurance process. This includes mid-term policy adjustments, claims notification and claims updates through self-service web interfaces and mobile apps.

While insurers are improving their digitisation capabilities, criminals are finding new ways to bypass the law and detection measures. The Association of British Insurers estimates that fraud adds, on average, an extra £50 to the annual insurance bill for every UK policyholder.

An emerging concern is that the increased focus on digital technologies is removing experienced insurance staff from the centre of the insurer. Where they would normally be introducing, holding and managing a relationship with the customer, new technologies such as ‘robo-advisors’ and easy-to-use web enquiry pages are set to replace this. This removes the human interaction aspect from a new business and claims process. Whilst this makes sense from a cost benefit aspect, some insurers have not considered the potential impact on fraud rates.

The sophistication of fraudsters and their determination to crack the system should not be underestimated. Individuals, households or organised criminal gangs who deliberately invent or expand claims will invest time and energy into understanding how best to exploit an insurer’s weaknesses in its fraud defences. Once known, expect a fraudster to act quickly to exploit a weakness – velocity of fraud is definitely on the rise.

Rise of the armchair fraudster

Does digitisation make it too easy for premeditative fraudsters to make claims? Perhaps. For example, fraudsters can manipulate a motor insurance quote from the comfort of their armchair. Changing rating factors such as annual mileage, or where a vehicle is kept overnight can significantly reduce the quotation. Similarly, when there’s a real claim for stolen property, it’s easy for the fraudster to add a few additional items to the list, or inflate the value of a damaged or stolen item.

A number of claims managers have expressed concerns that digital platforms and processes are not monitoring the full spectrum of clients. We’ve heard cases where, post-digitisation, the claims incidence for a given book of policy business has increased significantly. There is no guarantee this unwelcome uplift is due to fraud but it seems likely.

For the 90 per cent of customers that make a genuine claim insurers want to ensure that they get the best service possible. And many digitisation efforts are looking to address this and should be applauded.

But what about the one in 10?

Insurers are already embarking on ground-breaking anti-fraud projects. For example, identifying the IP address of an applicant or claimant’s computer or mobile device and looking for repeats has helped stem some of the tide.

What if we could use the data that exists within the insurer to progress the claimant or new business applicant down a specific path? Straight Through Processing (STP) has been around for some time, but what if we had real confidence that those claimants who were going down an STP route were part of the 90 per cent, rather than the 10 per cent?

Fraud analytics can be used to help steer the customer journey. Insurers can leverage real-time analytics to work out which claimants should go through the STP channel, or be automatically accepted as new business.

Analytics can also be used to identify which claimants or new business applicants should be referred to an insurance professional. Data analytics can screen new applicant to see if they ‘fit’ into a known high scoring fraud ring, and then pass this on for further investigation. Emerging threats and trends can be identified based on the insurer’s data, enabling the insurer to stay ahead of the next fraud wave.

Insurers using digital transformation programmes to provide a customer centric service should be encouraged, especially if they also have anti-fraud measures in place to protect their customers and lower premiums.

Find out more about how insurers that are embracing digitisation can take measures to tackle fraud.

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Bitcoin, ether hit fresh highs

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Bitcoin, ether hit fresh highs 1

SINGAPORE (Reuters) – Bitcoin hit a fresh high in Asian trading on Saturday, extending a two-month rally that saw its market capitalisation cross $1 trillion a day earlier.

The world’s most popular cryptocurrency rose to an record $56,620, taking its weekly gain to 18%. It has surged more than 92% this year.

Bitcoin’s gains have been fuelled by evidence it is gaining acceptance among mainstream investors and companies, such as Tesla Inc, Mastercard Inc and BNY Mellon.

Ether, the second-largest cryptocurrency by market capitalization and daily volume, hit a record $2,040.62, for a weekly gain of about 12%.

Ether is the digital currency or token that facilitates transactions on the ethereum blockchain. In the crypto world, the terms ether and ethereum have become interchangeable.

Ether futures contracts launched on derivatives exchange CME earlier this month.

(Reporting by Vidya Ranganathan; Editing by William Mallard)

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World Bank pushing for standard vaccine contracts, more disclosure from makers

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World Bank pushing for standard vaccine contracts, more disclosure from makers 2

By Andrea Shalal

WASHINGTON (Reuters) – The World Bank is working to standardize COVID-19 vaccine contracts that countries are signing with drug makers, and is pushing manufacturers to be more open about where doses are headed, as it races to get more vaccines to poor countries, the bank’s president said on Friday.

World Bank President David Malpass told Reuters he expected the bank’s board to have approved $1.6 billion in vaccine funding for 12 countries, including the Philippines, Bangladesh, Tunisia and Ethiopia, by the end of March, with 30 more to follow shortly thereafter.

The bank is working with local governments to identify and fill gaps in distribution capacity, after they purchase vaccines under a $12 billion World Bank program, and also to standardize the contracts they are signing with manufacturers, he said.

The bank’s International Finance Corp, its private financing arm, has $4 billion to invest in expanding existing production plants or building new ones, including in developed countries, but needs more data on where current production is headed, he said.

“We are eager to be investing in new capacity, but it’s hard to do because you don’t know how much of the existing capacity is already committed to the various off-takers,” Malpass said in an interview with Reuters. New or expanded plants could be used to produce other types of vaccinations in the future, he said.

The bank’s funds could be used to expand plants in advanced economies, if the production was earmarked for developing nations, he said.

Malpass welcomed Friday’s pledge by the Group of Seven rich countries to intensify cooperation on the pandemic, saying it could help jump-start deliveries of vaccines to poorer countries, which are lagging far behind rich countries in getting shots in arms.

Data compiled by Our World In Data, a scientific online publication, showed Israel was leading the world in COVID-19 vaccinations, with nearly 82 of 100 people vaccinated, while India and Bangladesh reported less than one person per 100, Many African countries have not started at all.

Malpass said he was heartened by news about new vaccines coming down the road, and about Pfizer Inc and BioNTech SE seeking permission to store their vaccine at higher temperatures, which would ease another obstacle to deliveries in lower-income countries.

(Reporting by Andrea Shalal; Editing by Heather Timmons and Leslie Adler)

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Google to evaluate executive performance on diversity, inclusion

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Google to evaluate executive performance on diversity, inclusion 3

By Paresh Dave

(Reuters) – Alphabet Inc’s Google will evaluate the performance of its vice presidents and above on team diversity and inclusion starting this year, the company said on Friday in one of several responses to concerns about its treatment of a Black scientist.

Timnit Gebru, co-leader of Google’s ethical artificial intelligence research team, said in December that Google abruptly fired her after she criticized its diversity efforts and threatened to resign.

Alphabet and Google Chief Executive Sundar Pichai ordered a review of the situation. While Google declined to share specific findings, the company announced on Friday it will engage human resources specialists during sensitive employee departures.

Pichai in June said that by 2025, Google aims to have 30% more of its leaders come from underrepresented groups, with a focus on Black, Latinx and Native American leaders in the United States and female technical leaders globally. About 96% of Google’s U.S. leaders at the time were white or Asian, and 73% globally were men.

As a result of the investigation, the company also expanded a commitment announced in June to devote more resources to retaining and promoting existing employees, including by expanding a team addressing disputes among workers and their managers.

The diversity component of executive performance reviews was not previously announced, and the company did not immediately share details about what would be measured and how pay would be affected.

Alphabet for years had rejected proposals from shareholders and employees to set diversity goals and tie executive pay to them.

Irene Knapp, a former Google employee who advocated for one such proposal at a 2018 shareholder meeting, said on Friday, “I am pleased that they met our demand from 2018, which was a bare minimum that should have been easy to do immediately.”

Evaluating managers on diversity goals is becoming more commonplace. McDonald’s Corp on Thursday tied executive bonuses to diversity.

(Reporting by Paresh Dave; Editing by Cynthia Osterman)

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