10% of insurance claims in Mideast are fraudulent

Around 10 per cent of insurance claims in the Middle East are fraudulent and only 20 per cent are detected, according to industry players.

“The exact rates of claims fraud, waste and abuse are difficult to determine but recent figures from regional industry and regulatory bodies suggests that ‘figures allude to the notion that as much as 10 per cent of claims are fraudulent and as little as 20 per cent of these are detected’, and global figures range from 5 per cent to 15 per cent,” said Ebru Jouzy, Fraud and AML (Anti Money Laundering) expert, Middle East and Turkey at SAS.

Insurance fraud and claims leakage are a concerning issue for all insurers globally including those in the Middle East.

PricewaterhouseCoopers’ 2014 Middle East Economic Crime Survey revealed that only five per cent of frauds were detected by internal audit, with 22 per cent detected by tip-offs and 16 per cent now detected by chance, indicating a widespread lack of effective fraud detection methods in the region.

“Combating claims fraud is difficult and costly for insurers but not for organised crime rings, which find insurance fraud to be a low-risk, high-return enterprise. With this in mind, it is important for insurance companies to have a defense mechanism that helps them to manage, detect and predict potentially suspicious claims before further losses are incurred.” added Jouzy.

Analysts across industries point to a continued shift of IT budgets away from in-house installations to cloud-based delivery models. CEB TowerGroup USA research shows that 59 per cent of insurance firms expect increased spending on cloud solutions technology over the next few years.