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A06948 | Pages: 291 | Charts: 60 | Tables: 168 |
The global insurance fraud detection market size was valued at $3.3 billion in 2021, and is projected to reach $28.1 billion by 2031, growing at a CAGR of 24.2% from 2022 to 2031.
[COVIDIMPACTSTATEMENT]
The ultimate goal of fraud detection is to save insurers from incurring fraud-related losses. And when fraud is detected before it is processed, or in a manner that allows carriers to act quickly, less loss is incurred. Fraud detection greatly increases the speed at which insurers are identifying fraudulent claims or potentially fraudulent claims. This is critical in today’s economy, especially in cases of workers’ compensation where fraud is increasing. The faster that fraud is identified, the faster insurers can respond and prevent any loss.
The increasing use of advance analytics and technology has led to increase in use of insurance fraud detection. Moreover, surge in number of insurance fraud including fake medical records, inaccurate claims, abductions, and others, has led to the rise of fraud detection products and solutions in the insurance market to reduce fraudulent claim settlement activities. In addition, increasing adoption of advanced analytics and technology are some of the factors propelling the insurance fraud detection market growth. Moreover, rise in cyber security infrastructure for insurance fraud detection is a major driving factor for the growth of the market. However, many insurance companies use outdated internal systems and rely on manual process including knowledge workers or business rules for detecting the fraud on excel sheets. In addition, improper handling of data and privacy of the clients are some of the major factors limiting the insurance fraud detection market. On the contrary, advances in technology and adoption of artificial intelligence and machine learning in detection of fraud in insurance claims are expected to provide lucrative growth opportunities in the coming years.
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The insurance fraud detection market is segmented into component, deployment mode, enterprise size, application, and region. By component, it is segmented into solution and services. By deployment mode, it is bifurcated into on-premises and cloud. Based on enterprise size, it is segregated into large enterprises, and small and medium-sized enterprises. By application, the market is divided into payment fraud and billing fraud, identity theft, claims fraud, and money laundering. By region, it is analyzed across Asia-Pacific, Europe, North America, and LAMEA.
[COMPONENTGRAPH]
By component, the solution segment attained the highest insurance fraud detection market share in 2021. This was attributed to the fact that insurance fraud detection solutions help insurers to identify suspicious activity, uncover hidden relationships and detect subtle patterns of behavior at every stage of the claims process.
[REGIONGRAPH]
Region wise, Asia-Pacific attained the highest growth in 2021. This is attributed to the fact that modernization or digitalization is the most accelerating trend in the Asia-Pacific. At start of the pandemic many companies were reluctant to sell insurance without a face-to-face interaction, but as it started to increase insurers started to invest in digital tools & solutions, and hybrid agency model.
The report includes of key players operating in the insurance fraud detection market analysis such as BAE Systems., Duck Creek Technologies, Equifax Inc., Experian Information Solutions, Inc., FICO, FRISS, Fiserv, Inc., IBM, LexisNexis Risk Solutions Group., and SAS Institute, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the insurance fraud detection market.
COVID-19 impact analysis
Since the start of the pandemic, there is a significant increase in the number of fraudulent claims. Phantom claims in relation to COVID-19 are those in which the client claims to have suffered loss or hardship as a direct result of the pandemic. Although there is no standard way for a phantom COVID-19 claim to be made, one thing they tend to have in common is that they claim the coronavirus pandemic has had a significant effect on their health and wellbeing. Fraudsters may also try to deceptively claim against a life insurance policy for a family member who they fictitiously claim to have died of the disease. Some of these fraudulent claims have been substantial, citing that the coronavirus pandemic has caused significant long-term consequences for the claimant. In some cases, the claims were made by clients who suffered no consequences whatsoever as a result of the pandemic. Therefore, technology and data are now playing a very important role in the insurance fraud detection industry when combatting fraud of this sort. It detects any unusual behavior throughout the customer journey from quote stage to underwriting, and during the whole insurance claim fraud detection stage. In addition, it enables cross-industry anti-fraud collaboration and protects honest customers. When it comes to fraud related specifically to COVID-19, market players are adopting fraud detection solutions as part of their digital transformation program to enable the detection of sophisticated and evolving fraudulent insurance claiming behaviors. Thus, the COVID-19 had a positive impact on the insurance fraud detection market.
Top impacting factors
Increase in insurance fraud
The insurance fraud detection software provides fraud analytics, which involves a set of analytical techniques to analyze systems and databases to identify activities where fraud can happen. The increasing happenings of insurance fraud has increased the demand for fraud detection solutions. Further, increasing incidents of customer frauds, including fake medical records, inaccurate claims, abductions, and others, has led to rise of fraud detection products and solutions in the insurance market. Insurance frauds are generally done at the time of application or claims, according to the survey conducted by The Hindu- business line. Moreover, the usage of AI fraud detection insurance is increasing the chances to identify cover-ups, misinterpretation of incidents, identity fraud, and false claims. For the past few years, insurance industry has been rapidly growing, as everyone is becoming more and more informative about the insurance industry & the advantages associated with it. This has given a chance to the fraudsters for committing scams and frauds in the insurance sector. Therefore, increase in life insurance fraud detection is one of the major driving factor of the insurance fraud detection industry.
Outdated internal fraud detection systems
Insurers can take advantage from accessing more data. Data processed quickly and accurately can further enhance the speed for detecting the problematic issues with the insurance claims. Updated and advanced software can fully automate underwriting and make better pricing decisions. Unfortunately, many insurance companies use outdated internal systems and rely on manual process including knowledge workers or business rules for detecting the fraud on excel sheets. Investigation and follow up becomes easier if the data is available on one system, it would instantly present the cases that require immediate attention. Moreover, work on integrated data and advanced solutions is expected to make less errors and reduce the data inaccuracy in handling fraud detection. Therefore, outdated internal fraud system are a major setback for the insurance fraud detection market outlook.
Key benefits for stakeholders
Key Market Segments
Key Market Players