Hannover Life Re of Australasia Tackles Insurance Fraud With Fortiro

Australia faces a significant challenge regarding insurance fraud.  

Insurance industry figures put the estimated range of fraudulent claims as up to 10% of total claims in Australia. 

Total Permanent Disability (TPD) and Income Protection insurance, which offer payouts to policyholders who are permanently disabled or unable to work, can be particularly susceptible to fraudulent activity.

Fraudulent activity includes exaggerating or falsifying disability claims and misrepresenting personal information, such as income. 

To tackle the issue of insurance fraud, insurers need to prioritise fraud detection and prevention as part of their operations in underwriting and claims processing. 

Hannover Life Re of Australasia Ltd (HLR Aus), a subsidiary of one of the world’s leading reinsurers Hannover Re, recognised the increasing risk of insurance fraud in the life insurance industry, particularly in TPD and Income Protection insurance. 

Claims assessment processes are traditionally focused on confirming that policy terms and conditions have been met by the claimant, and largely assume the documents provided are legitimate, therefore there has been less focus on the verification of these documents. With the increasing sophistication and availability of digital technology and documents, this has changed the landscape for life insurers. 

Why TPD/Income Protection insurance fraud might be going unnoticed 

Despite the prevalence of fraud in the broader insurance industry, TPD/Income Protection insurers may not be adequately equipped to detect fraudulent activities.  

Here are four reasons why fraud might be slipping through the cracks: 

1. Inadequate focus on fraud detection  

Insurers may lack focused and comprehensive fraud detection mechanisms, with many relying on manual reviews or tip-offs. Without the help of advanced skills and detection tools to support stringent verification procedures, fraudulent claims may go unnoticed. 

2. Complexity of claims 

Claims often involve complex medical assessments, and financial and personal circumstances, making it challenging to determine the legitimacy of a claim. Fraudsters may exploit this complexity to their advantage. 

3. Lack of integration with external data 

Some insurers may not integrate their systems with external databases, such as business records, government records or financial history, which help corroborate or challenge the validity of a claim. 

4. Resource constraints 

All insurers must carefully balance the investment into the resources for advanced fraud detection technologies while minimising manual reviews to avoid prolonging claim handling times.

How Hannover Life Re of Australasia improved fraud detection with Fortiro 

To address this challenge, HLR Aus sought innovative technology to enhance fraud detection capabilities while maintaining streamlined claims assessment procedures. 

In 2022, HLR Aus initiated a strategic collaboration with Fortiro. Fortiro’s innovative technology offers an automated verification of claim documents, promising to revolutionise the detection processes as part of claims assessment and fraud mitigation. 

HLR Aus conducted a proof of concept (POC) using Fortiro’s technology on 84 historical claims documents. These documents were categorised into three groups: those with previously detected fraud, suspected but unproven fraud, and genuine claims. The results were remarkable – within seconds Fortiro’s technology identified suspicious flags in 13 documents, leading to the confirmation of three instances of fraud and potential alterations for three more claims.  

This POC demonstrated the efficiency and effectiveness of Fortiro’s fraud detection technology, potentially saving HLR Aus significant financial losses due to undetected fraud. 

Implementation and Expansion of Fortiro 

Encouraged by the success of the POC, HLR Aus implemented Fortiro’s advanced fraud detection suite across their primary life insurance portfolio. Fortiro integrated seamlessly with HLR Aus’ claims assessment process and provided valuable insights into fraudulent activities, helping HLR Aus safeguard its business and protect policyholders from potential risks. 

Amy Sworden, Head of Claims Operations at HLR Aus, comments:

How does Fortiro Protect work? 

Fortiro Protect helps organisations automate document fraud detection and reduce manual review time. Fortiro Protect uses advanced techniques to recognise genuine income documents and performs a detailed forensic analysis to detect manipulated or fabricated documents. 

The Fortiro Protect engine analyses documents in three ways: 

1. Content analysis 

This involves checking for discrepancies and verifying content against other data sources. For example, checking the Australian Business Number (ABN) on a payslip is registered on the Australian Business Register. 

2. Layout and visual analysis 

Recognising differences in the layout and appearance of documents. These differences might go unnoticed by a human in comparison to genuine documents. This can include differences in fonts, formatting, and layout in general – e.g. where tables and images appear. 

3. Digital analysis 

Examining the digital makeup of a document including the metadata, layers, or hidden text to identify manipulated or fabricated documents. 

Using these techniques, Fortiro can detect fraudulent documents with a high degree of accuracy – whilst fast-tracking genuine documents. As a result, insurers can verify documents in under 30 seconds.  

Recognition and Future Outlook 

The collaboration between HLR Aus and Fortiro was recognised by industry experts, earning the prestigious “Global Development” award from Protection Review in 2023, exemplifying the power of InsurTech in reshaping traditional insurance practices.  

This acknowledgment underscored the positive impact of Fortiro’s technology in enhancing fraud detection within the life insurance industry. Looking ahead, HLR Aus envisions further leveraging Fortiro’s technology to automate claim verification processes, improve operational efficiency, and mitigate risks associated with undetected fraud. 

With Fortiro, HLR Aus has strengthened its fraud detection capabilities, integrated with its claims assessment processes, and positioned itself as a leader in the fight against insurance claims fraud. This strategic collaboration not only protects HLR Aus’s financial assets but also fosters trust and confidence among policyholders, contributing to a healthier and more sustainable insurance industry ecosystem. 

Sean Quagliani, Fortiro CEO and Co-Founder added:

“Fortiro exists to remove document fraud and friction, so we are excited to partner with Hannover Life Re of Australasia. Insurance fraud is a global challenge, and with the proliferation of digital tools, fake documentation is easy to create and very difficult for assessors to recognise. The POC with HLR Aus has shown incredible potential for HLR Aus to protect the business, cedants and society from fraudsters, and to further streamline and digitise the underwriting and claims assessment processes.” 

To find out more about how Fortiro can help your business, click here for a complimentary consultation.