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Technology is a good investment for every sector of the economy. Development and fast growth is now possible for each industry which integrates the latest in the market. It has become both strength and opportunity for every business entity to achieve success. Yet, it is also a weakness and poses as a threat for vulnerable businesses targeted by fraudulent acts.
The business sector has introduced the shift of credit card usage to chip cards, a more complex system which prevents the increasing number of card frauds. Since it has been proven possible, other sectors demand their own share of strengthened protection. Insurance is one of the industries that desperately need a new management tool to stop illegal transactions, predict fake claims and avoid identity scams.
A recent report by Coalition Against Insurance Fraud suggests that insurers are now working harder than ever to produce technologically advanced systems and predictive analytics. With what has been achieved, a lot of insurance companies integrates and launches while developing countries adapt on it. It is a never ending cycle: invention, innovation, integration and variation.
Take for instance the process in Asian cities and nations. When leading countries such as Singapore, South Korea, Japan or China has new system adapted from western countries, developing cities such as Bangkok, Thailand, Jakarta, Indonesia and Kuala Lumpur, Malaysia patterns their own data system and merge it to their own products and services. The security system is then being followed by other regions. Unfortunately for those who would not have the sufficient funds and resources to shoulder these costly systems, they resort to cheaper data protection applications instead.
Insurers cited data integration and poor data quality as a major challenge in implementing anti-fraud technology. Many projects get off track before they even get started because of data access and data quality challenges.
While technology is still lacking, there are still ways to protect information.
Many experts suggest integrating data silos for data analytics in each country’s core. Even as they come from different places, claims, policy, application, billing and medical data sources, the data should be gathered for proper management and easier comprehension for possible fraud breach. It is also critical to document the integration efforts and ensure that they are repeatable and auditable. This will be vital when companies already enable fraud analytics scoring in production.
Integration of these data in one silo can create erroneous statistics and figures. Employing certain number of people dedicated to check and recheck the validity of information on the silos can be useful in management.
Global disasters are continuously claiming lives in an alarming number and speed. We now know that these tragedies do not follow weather climates or the demography of the place. Hurricanes after tsunamis after earthquakes no longer choose the place and the season. They just struck on the most unexpected time. Hails are already happening in tropical countries when humidity is dominant and 20° is already considered freezing. Moreover, it happens in the middle of summer.
Typical insurances cover the basic risk associated in a home but floods and other calamities are not included. The higher the risk your home is near flooded areas, the lesser the chance of low premium. Large insurance and reinsurance companies like Lloyds and Fitch have already been alarmed on the worsening calamity change. The losses are increasing every year and claims have been higher in number. Moreover, fraudsters even take advantage of the worsening situation to create their scheme and pose fake claims.
Axis Capital, with a group of insurance and reinsurance companies in Bermuda, Singapore, Australia, the United Kingdom and United States, also state the same concern. Global calamities have affected their clients from all over the world and it gets worse since some of their offices are based on disaster prone areas. Other companies voice out their frustrations, some even close their businesses due to financial bankruptcy. Global economy has greatly been affected on the loss of both lives and businesses.
According to a review of Swiss Re, the second largest reinsurance provider, the global insurance industry covered $21 billion on the last quarter of 2014. The total economic cost of disasters in the whole year of 2014 was $44, 000 with the deaths of 4, 700 people.
By providing indemnification clauses, victims of calamities get benefits taken from the payments of those not affected, causing much dispute and complaints from different sectors. But funds had run out and financial cycle is the only solution these providers can think of.
It gets worse for developing countries and cities which has low number of insured citizens. With the minimum support from the government and no concrete laws supporting the cause, insurance cannot be imposed.
Since the effects and consequences of uninsurance are already realized, many cities are slowly implementing rules on their citizens. Jakarta, Indonesia and Kuala Lumpur, Malaysia are the leading ones to enforce even basic insurance to their people.
Calamities still happen. We can only pray and ask that we can be well prepared to face them.
We have heard of anti-terrorism insurance before which really existed and was hard pressed after the 9/11 bombing. War Risk Insurance came way before that albeit it only gained its fame among marines and soldiers fighting off their lives. I know nobody would disagree with Axis Capital Group that this kind of insurance is indeed a very important insurance to have.
According to the War Risk Insurance Act 1914, the Insurance is one of the most important items in the list of war-time legislation. It embodies a comprehensive program for the support of families and the serving men and women in wars, compensation for those killed, disabled or enfeebled together with pro- vision for the re-education of the disabled; voluntary insurance at low rates, administered by the government.
War risk insurance is a type of insurance which covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction. It is most commonly used in the shipping and aviation industries. War risk insurance generally has two components: War Risk Liability, which covers people and items inside the craft and is calculated based on the indemnity amount; and War Risk Hull, which covers the craft itself and is calculated based on the value of the craft. The premium varies based on the expected stability of the countries to which the vessel will travel.
This kind of insurance had been offered in almost all countries in the world. In Asia, piracy is one of the main reasons to claim insurance especially in archipelagoes such as Indonesia near Jakarta where a lot of scams are being imported through piracy.
Private war risk insurance policies for aircraft were temporarily cancelled following the September 11, 2001 attacks and later reinstated with substantially lower indemnities. In the wake of this cancellation, the US federal government set up a terror insurance program to cover commercial airlines. The International Air Transport Association has argued that airlines operating in states which do not provide war risk insurance are at a competitive disadvantage in this area.
According to a review of the Research Study Group Report 258, a detailed study of the Insurance of War Risks and Terrorism, including related perils such as Strikes, Riots, Civil Commotion, and Military or Usurped Power is available from the Insurance Institute of London.
