How much ICBC expects to save by using new anti-fraud software

The Insurance Corporation of British Columbia (ICBC) expects to save $43 million this fiscal year and another $59 million the following fiscal year by using specialized anti-fraud software that the public insurer implemented in 2017.

“And that’s on top of the millions we’re saving with the work that we do every day to stop fraudulent claims,” ICBC spokesperson Joanna Linsangan told Canadian Underwriter earlier this week.

Last year, the provincial government insurer started using the tool, which implements data, algorithms and statistical methods to help identify potential fraud cases early in the claims process. In a 2016 press release, ICBC said it initially expected fraud detection and enforcement activities to reduce basic insurance claims costs by $21 million for policies written over the next year. All activities, including use of the analytics tool, were expected to save up to $44 million a year by 2019, ICBC said at the time.

The first run of data through the analytics tools reviewed claims information over the recent three-year period and generated 3,300 possible fraud alerts on open claims. As of Dec. 8, 2016, it had reviewed the first 102 alerts and started 48 new suspected fraud investigations.

Last week, ICBC released the results of survey that found that that 47% of 1,373 respondents believed committing auto insurance fraud was an “accepted practice” in B.C. Also, 79% of respondents believed that up to half of all claims with the public auto insurer contain an element of fraud.

“It’s disappointing to hear that is the perception many of our customers have,” Linsangan said. “We’re not sure why this is the case, but it could be that when it comes to auto insurance fraud, we don’t see the victim.

“The reality is, with auto insurance fraud, we are all victims. Anyone who has purchased insurance to drive their car in B.C. is paying – potentially to the tune of $100 more per year – because of people who commit fraud. We also want those people committing fraud to know that we aren’t simply going to sit back and pass these costs onto honest customers. We are going to do everything we can to detect, deter and, where appropriate, pursue legal action.”

Linsangan said ICBC is undertaking a number of initiatives to detect and prevent insurance fraud from happening, including the use of technology, improved training and public education and media awareness efforts.

Last year, ICBC’s Special Investigations Unit completed more than 16,000 investigations for suspected fraud, of which 54% were found to contain an element of fraud. That number is about the same as past previous years, Linsangan reported. When asked if she had an estimate of how much fraud costs every year in B.C., Linsangan said that “while it’s impossible to quantify how prevalent fraud is for ICBC claims, what we do know is that the industry estimates suggest that 10-20% of claims costs contain an element of fraud.”

Customers can also anonymously call ICBC’s fraud tip line if they have information regarding a suspicious exaggerated or fraudulent claim. And while there has been talk of mandatory fraud reporting in Canada, what are ICBC’s thoughts? “While ICBC has a very throughout anti-fraud program, we are always open to working more with provincial and federal governments to combat fraud.”