In this blog, a Tradecraft Advisor at Fivecast shares their expertise on Open-Source Intelligence investigations and uncovers how OSINT can be a powerful tool in your organization’s fight to counter insurance fraud.
The Immense Cost of Insurance Fraud
Insurance fraud is a multi-billion-dollar issue with significant consequences. The knock-on effects of insurance fraud include higher premiums for consumers as the environment becomes more costly for insurance companies to operate in. However, there is hope, OSINT is a valuable, abundant, and cost-effective tool to help combat this form of fraud.
The Hidden Cost of Fraud
Insurance fraud comes in many forms, including fraudulent claims related to workers’ compensation, healthcare, home and vehicle theft, and damage or accidents. Individually, fraudulent claims can cost significant amounts of money. Others may appear minor in nature but form into a pattern of recidivist offending that adds up to a massive impact across the industry. Consequently, this increases the overall cost of claims, including payouts, time spent on investigations, and recovery actions (e.g., court action).
In 2023, members of the Insurance Council of Australia [1] detected $560 million (AUD) worth of opportunistic insurance fraud in the motor and property sectors alone. Undetected fraud is estimated to cost the insurance industry a further $400 million annually [2].
Insurance fraud is not confined to one country; it is a global concern. Research by Forbes in 2024 revealed that insurance fraud in the United States alone costs over $308 billion (USD) each year. This widespread loss translates into an average premium increase of $900 per consumer [3], highlighting the need for a global approach to combating insurance fraud [4].
Opportunistic Vs. Planned Fraud Tactics
While diverse in approach, insurance fraud falls primarily into one of two groups:
Opportunistic
These are fraudulent claims people make in response to an unexpected situation. For example, exaggerating the severity of an injury or damage to an insured item after an accident or natural disaster.
Planned
These fraudulent claims are premeditated and can be executed by individuals or highly sophisticated criminal groups. This may include staged accidents or someone who fraudulently claims their car was stolen when they secretly sold it to an associate. Additionally, organized criminal groups may collude with businesses to falsely claim undeclared sales as thefts.
There are many different types of insurance scams, and perpetrators often repeat them (sometimes with the same assets) against multiple insurance providers.
The Cost/Benefit Ratio
At the heart of this approach is the hope that investigating the crime will be too difficult or costly. Thus, investigating and denying the claim will be more expensive than simply paying it out. This is particularly true of claimants who aggressively use litigation as leverage. A court battle can be lengthy, costly, and challenging to win.
In these fiscal calculations, OSINT can offer powerful and cost-effective tools to assist assessors and investigators in identifying common patterns and collusion observable in both individuals and networks committing insurance fraud. By providing actionable intelligence, OSINT enables organizations to make informed decisions quickly, reducing the time and resources spent on investigations. In the intelligence community, human-led information collection (for example, using a private investigator) is often called “the method of last resort.” That is because it is complex, risky, and costly. OSINT, on the other hand, is seen as the “method of first resort.” That’s because it can be powerful, carries far less risk, and is very cheap compared to in-person investigations at different physical sites over extended periods.
Reduce the Cost of Claims with OSINT
OSINT can reveal crucial evidence of an individual’s physical capability. An Irish woman sued her insurance company for 650,000 pounds after claiming a 2017 car crash left her in a “disabling” condition. During the court case, a photo was entered into evidence, taken from open media sources, showing the woman winning a charity competition by throwing a five-foot Christmas tree the furthest distance. Her claim was subsequently denied [5]. Social Media is also a common pitfall for fraudsters, who forget how much incriminating personal information they often give away.
One key benefit of Fivecast ONYX’s targeted and automated data collection is the ability to quickly and accurately gather large amounts of publicly available information across millions of online sources. Using advanced data collection combined with Artificial Intelligence (AI) -enabled risk analysis, Fivecast ONYX automates complex intelligence tasks, helping analysts sift through vast amounts of online data to identify relevant information in seconds.
A further example of how this data can impact insurance investigations is the identification of links (such as social media) between seemingly disparate individuals making insurance claims – for example, proof that both sides of an “accident” and their “preferred” repairer were all known to each other before a “staged” accident.
The Role of OSINT in Fighting Insurance Fraud
Fivecast ONYX empowers intelligence teams and investigators to gather information online that is crucial for supporting or refuting claims across various claim scenarios. For example, it can be used to verify claims of damage or loss resulting from accidents or natural disasters. One of the most immediate and abundant data sources is what individuals share online. OSINT tools allow insurance companies to quickly investigate suspicious claims, particularly those arising from areas not directly affected by a disaster. These tools and methodologies can also assist in tracking assets that may be falsely claimed as lost and identify connections between individuals and companies, especially among recidivist fraudsters who often share successful criminal methodologies with one another.
OSINT as a Method of First Resort
OSINT should be a method of first resort for investigators. While more costly and complex strategies might be necessary in some cases, tools like Fivecast ONYX enable companies to allocate resources more effectively to areas where they are genuinely needed.
Request a demo from our intelligence-trained Tradecraft team to learn more about how Fivecast helps companies and government agencies use OSINT to aid their investigations.
REFERENCES
[1] The Insurance Council of Australia (ICA) is the representative body of the general insurance industry in Australia
[2] ICA, 2024 – https://insurancecouncil.com.au/wp-content/uploads/2024/05/240521-Insurance-industry-boosts-fight-against-fraud.pdf
[3] Forbes Advisor, 2024 – https://www.forbes.com/advisor/insurance/fraud-statistics/
[4] Forbes Advisor, 2024 – https://www.forbes.com/advisor/insurance/fraud-statistics/
[5] The Guardian, 2024 – https://www.theguardian.com/world/2024/feb/25/kamila-grabska-woman-loses-650000-injury-claim-after-being-seen-tossing-christmas-tree
