Jeroen MORRENHOF: FRISS has 100% focus and dedication to fraud detection and risk mitigation for non-life insurance companies worldwide. FRISS helps insurers to improve their combined ratio in order to achieve profitable portfolio growth and enhance the perception in the market as a trustworthy insurer. FRISS believes in honest and fair insurance premiums, for everyone. With 70+ implementations at insurers we are the European market leader.
As a proven standard the FRISS Score enables better decisions. It is the core of the solutions and indicates the risk for each quotation, policy or claim. FRISS cares for its customer before, during and after implementation. For our solutions, customer specific configuration is the main part. Rather than general purpose analytic software or homegrown systems that have to be built from scratch, FRISS is largely prebuilt and therefore a ready-to-use business solution.
XPRIMM: Why FRISS does what it does?
J.M.: At FRISS, we believe in honest insurance. Our question for insurance companies: why do your sincere customers have to bear for the risk brought in by others? In the end it is the society that suffers from fraud. Our mission is to strive for a trustworthy insurance industry, healthy insurance portfolios and fair insurance premiums for everyone.
XPRIMM: What is your vision on fraud prevention and detection for insurance companies?
J.M.: Insurance fraud is a serious issue for the entire insurance sector. Payment of fraudulent claims has a negative effect on the loss ratio and on insurance premiums, which results into a competitive disadvantage. Moreover, investigating 'false positives' takes a huge amount of time and unnecessary costs. Fraudsters are getting smarter in their attempts to evade the insurer's radar. As a consequence, money flows to the wrong people and thus combined ratios are under pressure. Insurance companies must detect insurance fraud before claims are paid. The best way to reduce the loss ratio is to increase the chances of fraud detection at claims and limit false positives to a minimum.
Using automated fraud detection during the claims process enables an accurate estimation of the risks related to a claim. It improves straight through processing (STP), and claims that need further attention will be recognized directly. Such accurate and objective risk evaluations should be supported by various aids such as expert rules, risk profiles, predictive models, text mining and link analysis. The available information form external data sources could be essential and combined with internal data very valuable in the fight against fraud.
Furthermore, most insurance companies focus on the growth of their portfolio and less on its quality. It is important to have a clear picture of potential customers before they enter your portfolio. You should decide on the amount of risk you are willing to take in and to have the ability to adjust the screening to your pre-determined risk profile at any time. This way, you will keep control over your portfolio and maintain the optimal balance between quantity and quality.
XPRIMM: What are the latest trends and developments?
J.M.: We received valuable market insights from our recently published Insurance Fraud & Digital Transformation Survey. This is an international survey with input from 160+ insurance professionals out of 25+ countries. Interesting findings are that insurance professionals value fraud priority with a 7 out of 10 on average. Claims and underwriting departments have the highest fraud priority, but are also the departments that need the most increase in engagement from the organization. Sales and digital/online departments lack attention for fraud and should be more engaged. Biggest fraud challenges for insurers are related to data: issues with data protection and privacy (36%), inadequate access to external data sources (36%) and problems with internal data quality (30%).
Where 59% of the organizations actively works on fraud management within the portfolio, 46% of them rather prevents fraud than cure it. In 18%, covering risks in premiums still is common practice. The customer carries the burden. Fighting fraud is yet a manual operation within many organizations (45%). Here, fighting fraud can be a time consuming and error prone process. Organizations with an automated solution (48%) are more effective at fraud investigation by directly recognizing claims that need further attention or require active follow-up. In the next 12 months, 59% of the organizations has planned a project to improve the detection of fraud and risk.
XPRIMM: Why does FRISS enter the Romanian market? What is your view on the market?
J.M.: Our strong European position enables us to further expand our geographic coverage in Europe, the Americas and Asia.
For Europe we looked particularly at the East European countries, from the Balkans up to the Baltic states. Romania has one of the biggest economies in that region and a population of about 20 million people, more than the size of the Netherlands where FRISS is headquartered.
FRISS provides solutions for all non-life lines of business, but has particular experience in the motor business as most of our clients started to use the FRISS fraud detection solution in this branch. The Romanian insurance market is strongly dominated by the non-life business with around 80% of the total insurance premium. Within the general insurance market, the motor business has by far the highest share with about 70%. This is one of the highest proportions in Europe.
In the Romanian market more than 20 insurance companies offer motor insurance. We see an interesting opportunity to serve these companies, especially as the biggest local players are already clients in other European markets.
When we decided to enter the market we did not know that soon afterwards the supervisory authority would decide to freeze the increase of MTPL premium. In this context, fraud fighting and the control over the claims costs becomes even more important.
Our experience in many European countries shows that we achieve a return of investment within the first year. In other words: due to the fast implementation within 4-5 month our solution is "self-financed" by the identification of additional fraud cases and the savings on claim payments and delivers extra profits as of year two.