The Coalition Against Insurance Fraud (the Coalition) is a US alliance of over 260 organisations with an interest in the tackling of insurance fraud. It’s currently undertaking a public survey as part of a study on ‘The Ethical Use of Data to Fight Insurance Fraud’. The survey is entitled "where and should guardrails be placed?" I had a close look at the survey and was impressed by the scope and depth of what they were asking. These were plenty of pertinent questions that could be answered from a range of perspectives.
So why is the Coalition undertaking this study on data ethics? I can’t find out the exact reason, but from looking at what they do and how they do it, I sense there are two reasons. Firstly, their governance arrangements encompass a range of perspectives. And secondly, those perspectives will have picked up on the ethical concerns being voiced around the overall theme of insurance, data and trust.
The Coalition is led by a diverse group. It has four chief officers, two of which are from insurers, one from the association of state insurance regulators and one from a leading consumer group. Its executive committee members are from insurance, academia and consumer groups. And its membership shows a similar diversity. The CAIF is very clear about what this diversity gives them – an ‘unparalleled credibility’.
That diversity of perspective will have driven the commissioning of their data ethics study. Once completed, I expect that the Coalition’s insurer and supplier members will then have some real data to influence their strategic and operational decisions relating to counter fraud. How they use it is of course another thing, but at least the survey is a good step in the right direction.
Why Not the UK?
So why am I surprised that such a survey has not emerged from the UK’s sector initiative on counter fraud, the Insurance Fraud Bureau (IFB)? Well it is a private company, the officers of which are all senior insurance executives. Given the amount of insurer data that is fed into the IFB and the analysis output that is then fed back to insurers, it is more than a little surprising that the IFB is not even regulated by the FCA.
The IFB’s influence on insurers’ underwriting and claims decisions is enormous. It is responsible for putting several thousand people a year onto its Insurance Fraud Register, the impact of which is effectively to make those people uninsurable.
So the IFB’s power and influence is considerable, yet its accountability is weak. With all of its officers being senior insurance executives, its governance lacks diversity, in terms of skills, knowledge and perspective. This means there will be far less challenge and debate, far less than there should be. As a private company, it can get away with this, while a public company (like all those its officers work for) would not.
I’ve been following the IFB since its launch and during that time, I’ve been clear about my concerns for its governance. The contrast with the CAIF’s governance is immense. In simple terms, the singular profile of the people overseeing the IFB, versus the diversity of the people overseeing the Coalition.
Public and Political Support
Let’s turn that round for a minute and look at it from the long term objective of both organisations, summed up as the tackling of insurance fraud. That objective is one that UK insurers know they cannot deliver on their own. As their publicity campaigns have emphasised, public support is important, and by extension, political support as well.
From what I can see of the CAIF, they hold similar views. Yet the UK approach seems to be that the public should give them their unconditional support – just trust us, seems to be the narrative. Several of the questions in the Coalition’s survey on data ethics directly addresses that notion of unconditional support. This points to two things. Firstly, the recognition that there are differences of opinion on this. And secondly, the survey’s findings will be a very interesting read.
Tackling insurance fraud is an ethical thing to do. And how you tackle insurance fraud needs to be ethical too. They’re two sides of the same coin. The starting point for this lies in the governance arrangements used. The UK approach is weak on this. We need to learn from our US counterparts.