A recent report by Petr Kafka, head of the investigation unit at Generali Czech Insurance, has shed light on a concerning surge in insurance fraud cases in the Czech Republic, particularly incidents involving fabricated injuries. The report highlights instances where individuals manipulate personal details on legitimate health documents provided by doctors, raising alarms within the insurance industry.

The escalation of insurance fraud has become a pressing issue, with many insurance companies reporting significant year-on-year increases in fraudulent activities, often by substantial margins. For example, fraud cases totaling 727 million crowns were recorded last year alone, marking a 25% increase compared to the previous year. While some attribute this surge to economic challenges faced by firms and households in the preceding year, others point to ethical concerns.

The typical profile of an insurance fraudster often aligns with male demographics, particularly in motor vehicle-related damage claims. This prevalence is partly attributed to the ease with which damages can be exaggerated or falsified in motor insurance events, compounded by historical trends dating back to the 1990s.

Interestingly, most fraud cases involve the inflation of genuine damages rather than the fabrication of entirely fictitious incidents. In many instances, individuals experience legitimate damage but exploit the situation to overstate the value of the damage incurred. However, there are also instances where fraudsters fabricate entire damage events that never occurred.

In response to this growing challenge, insurance companies are turning to artificial intelligence (AI) to bolster their counter-fraud efforts. AI-powered tools are being deployed to detect fraudulent activities, with teams of data analysts leveraging advanced algorithms to identify suspicious cases. Despite technological advancements, human expertise remains integral to effectively combating insurance fraud.

As the insurance landscape evolves, it is imperative for industry stakeholders to remain vigilant and proactive in addressing fraudulent activities to uphold the integrity of insurance systems and protect the interests of policyholders.

Article by Prague Forum