Tuesday, March 8, 2016

Garbage in Garbage out? What happens to real time end to end processing without real time end to end fraud management?

Relentless market forces are driving P&C insurers to make risk-based decisions in real-time, 24/7 across every channel.  And consumers are taking full advantage of the opportunity to shop for deals – with quote volumes increasing even as quote-to-close rates drift ever lower. Ironically, shopping helps them become better information manipulators – rewarding them for shopping even more.  Fraudsters find it easy to hide in this  torrent of fuzzy information, masking their identities and intentions.  

Yet most of the systems and processes FIs employ were designed for a slower era - one in which there was time to assemble and analyze data and make fully informed decisions.  Today, there is simply too much information and too many decisions coming too fast to do business the old way so many insurers are replacing their core systems with more automated, integrated solutions that provide hands free end to end processing.  They have heard the customer's demand for 'fast' and they are responding.

Unfortunately real time quotes without the anti fraud automation to make real time fraud judgments and interventions just means more fraud faster. Indeed automating a process where much of the data is inaccurate or deliberately deceptive is the oldest mistake in information systems, going under the name "Garbage in Garbage out."

Insurers need to solve the accelerated fraud risk problem the same way they've solved the real time response challenge:  with integrated, end to end automation of the fraud identification, intervention and decisioning process. And ideally, this capability needs to be put in place at the same time or even before the real time end to end processing capability goes live. 

Failing to do so would be like building a house without doors or locks: no doubt an impressive structure but you don't dare put anything in it.

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