ISM Insurance Services Malaysia Berhad (ISM) has today announced the official launching of Fraud Intelligence System (FIS), the Malaysian Insurance and Takaful industry’s latest initiative in the fight against fraud.
It was inspired by consortiums and bureaus in other developed markets which set up industry organisations dedicated to combating insurance fraud through the use of data, analytics & technology.
Based on international benchmarks, it is estimated that approximately 10% of claims are fraudulent.
The cost of claims fraud may lead to higher premiums in a liberalised pricing environment, which ultimately legitimate customers will have to bear.
One of the pioneers of the region, FIS started off as a research project in 2014, then went live in September 2017 after nine months of development with four pilot companies.
Subsequently, the system will be fully utilised by the rest of the insurance companies and takaful operators in Malaysia.
The industry invested over RM10 million in FIS which was developed together with BAE Systems to provide insurance companies and takaful operators with the ability to detect and investigate insurance fraud.
By pooling together industry data, the system takes a data science approach to fraud detection.
It offers insurers and takaful operators a bigger picture to assess claims holistically in order to detect potential fraud.
Suspicious claims can be detected more quickly and efficiently, and similarly it will be easier to identify genuine claimants as well.
ISM chairman Kong Shu Yin said such fraud is not a victimless crime, as ultimately it is the consumers who will pay.
“FIS is imperative in the fight against insurance fraud using cutting edge technology and data science.
“This will allow insurers and takaful operators to provide better customer service and pass on any savings to consumers in a liberalized market, a twofold benefit for the consumer,” he said.
Kong added that FIS would not have been a reality without the support of Bank Negara Malaysia and expressed his utmost gratitude to them.
Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim launched FIS during the Malaysian Insurance Summit 2017 to mark the first milestone by the insurance & takaful industry to combat fraud in a coordinated effort.