Financial Crime World

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Insurance Industry Unites Against Fraud: Big Data Solution Boosts Anti-Fraud Efforts

In a groundbreaking move, Italy’s insurance industry has come together to combat fraud with a single, shared database that harnesses the power of exponential growth in connections.

The Claims Data Base (BDS)

The Insurance and Reinsurance Federation (AIA) has developed an innovative system that integrates data from various sources, including public registers, insurance databases, and claims records. The Claims Data Base (BDS), which has been operational since 2001, contains over 6 billion records of information on crashes, vehicles, and individuals.

AIA Anti-Fraud System

The AIA anti-fraud system, dubbed “AIA 1.0,” uses a set of binary indicators to identify potential fraudulent activity. Each indicator is weighted to contribute to a total score, which is then classified into four levels: null, low, medium, or high.

Network Analysis Tools (AIA 2.0)

The system has incorporated network analysis tools in its latest upgrade, “AIA 2.0.” By creating a statistically validated bipartite network (SVN) composed of subjects and crashes, analysts can identify communities with dense connections within and sparse connections between.

  • Quantitative indicators used to evaluate clusters or modules:
    • Size
    • Connectivity
    • Robustness
  • Global indicator with three thresholds to determine the level of suspicion of fraud

Performance Analysis

In an out-of-sample analysis using 400 verified fraud cases, the system demonstrated a remarkable:

  • 3.3% probability of false negatives (type 2 error)
  • 19.5% probability of false positives (type 1 error)

Future Developments

The AIA public system is now available to all insurance companies, law enforcement agencies, and courts in Italy, providing a powerful tool in the fight against insurance fraud.

Future developments include:

  • Expanding the database
  • Enhancing analytics capabilities
  • Extending AIA’s scope to the underwriting phase

Conclusion

This collaborative effort has set a new standard for anti-fraud initiatives worldwide, paving the way for a more efficient and trustworthy insurance market.