TECH

How leading-Edge Blockchain Technology helps prevent duplicate payouts in the Insurance Industry

MoData, a digital and financial solutions specialist that works with leading banks, financial services, and investment companies across Africa,

MoData, a digital and financial solutions specialist that works with leading banks, financial services, and investment companies across Africa

A long-standing area of concern across the insurance industry is fraudulent duplicate claim pay-outs – also known as double-dipping fraud – which costs the industry millions of dollars each year. Owing to data and technological limitations, the detection of this type of fraud has remained largely unviable – until now.

IntellectEU’s award-winning ClaimShare platform has been specifically developed to detect duplicate claims, while preserving privacy, to prevent insurers from paying out twice. MoData, through its partnership with IntellectEU, offer this innovative solution to its clients across Africa, bolstering its fraud-detection offerings.

The high cost of insurance fraud

Fraudulent insurance claims are estimated to total around US$100 billion each year – that’s around 10% of all claims. Of this, between 5% and 10% are because of double-dipping fraud.

Duplicate fraud for the same loss event occurs hundreds of times each day and is estimated to cost the insurance industry from US$5 billion to US$10 billion annually, directly impacting customers by driving up insurance premiums.

How ClaimShare works

ClaimShare enables the insurance industry to solve a problem that previously seemed unsolvable by utilising confidential computing, blockchain and artificial intelligence to assist in the early detection of double-dipping fraud. It gives a consortium of insurance companies a quick and automatic way of identifying and eliminating the duplication of claims for the same event, while also complying with regulations.

“ClaimShare is playing a vital role in the digital transformation of the insurance industry,” says fraud expert and thought leader, Clive Gungudoo, MoData’s Director of Financial Crimes and Risk Management. “ClaimShare is easy to integrate and does not require any changes to the insurer’s front, middle or back-office systems. It integrates with claims-handling systems and the insurers’ back-office systems using simple, real-time APIs.”

Privacy and compliance are crucial in the insurance industry, and ClaimShare’s use of confidential computing means customers’ privacy is respected, and no sensitive data is revealed to any competitors. It does this by separating the content of the claim into public (non-personal identifiable information or non-PII) and private (PII) data. The “public” part of the verified claim is shared with all insurers in the network on a distributed ledger, while the “private” part of the claim is not shared but is used to confirm fraudulent duplicate claims.

“ClaimShare uses fuzzy-matching algorithms to identify suspicious claims, which are shared on the blockchain ledger,” explains Clive. “Once claims are suspected of being fraudulent, ClaimShare uses hardware security to ensure robust data security, privacy and regulatory compliance to match the private data, confirming the fraud attempt before an insurer duplicates a payout for the same claim. In this way, through ClaimShare, insurers are effectively able to eradicate double-dipping fraud.”

Offering insights

Because so many insurers have very little idea of the loss they experience owing to double-dipping fraud, MoData can run a back-testing programme, evaluating historical claims and quantifying the loss. “Once insurers realise the scale of the loss, they appreciate that the return on investment in a single year is potentially so advantageous it makes financial sense to have this innovative solution in place,” says Clive.

ClaimShare is all about collaboration within the industry, and by working together, insurers and their customers all stand to win. “While ClaimShare delivers huge cost-savings across the entire sector, it also enhances trust in the industry and reduces insurance costs for consumers. Being able to offer ClaimShare to our customers once again underscores MoData’s commitment to delivering innovative, agile solutions to our clients in this ever-changing digital landscape.”

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