SAN JOSE, Calif., Sept. 10, 2013 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today released the results of a survey of U.S. and Canadian insurers showing that one in three insurers does not feel adequately protected against fraud. The survey, which focused on insurance claims fraud, revealed that insurers feel most vulnerable in the areas of premium leakage and new applications, when policyholders often underestimate or leave out such information as annual auto mileage that would have an adverse effect on the cost of the policy.
In the survey, 35 percent of insurers estimated that insurance fraud costs represent 5-10 percent of their total claims, while 31 percent said the cost is as high as 20 percent. More than half (57 percent) of insurers expect to see an increase in fraud losses this year on personal insurance lines – policies designed to protect individuals and families – while only 5 percent of insurers expect to see a decline in dollar fraud losses on personal lines. In the U.S., 42 percent of insurers foresee the mid-Atlantic states ( New York, Pennsylvania and New Jersey) as being hardest hit by personal lines fraud. In Canada, 42 percent of insurers foresee Quebec as being hardest hit by personal lines fraud, and 39 percent foresee Ontario as being hardest hit.
Respondents also said they expect the biggest fraud loss increases to hit personal property, workers' compensation and auto insurance. In terms of fraud by individual policyholders, 58 percent of insurers forecast an increase in personal property fraud, 69 percent forecast an increase in workers' compensation fraud, and 56 percent forecast a rise in personal auto fraud. The majority of insurers (51 percent) attributed the increases in fraud to inconsistent economic recovery in low-growth areas.