GUEST COLUMNIST–Inside the Mind of a Fraudster

GUEST COLUMNIST–Inside the Mind of a Fraudster

  • Post category:The Dry Log

The Dry Log is proud to have Guest Columnist, Michael Skiba, known as Dr. Fraud, share his thoughts with Rytech’s carrier partners. He’s an international expert on economic and insurance fraud who teaches how, “carriers can leverage the technology tools used against them…to create a level playing field.”

An increase in the use of technology has made it easier for fraudsters to feel ‘ok’ about committing fraud since they don’t feel an affinity with their victims.  

Consider these disturbing facts: 1) Fraud costs an average of $82 billion per year, 2) Twenty-five percent of the public believes it is acceptable to commit fraud, 3) There were 17 billion connected devices in 2018 and 50 billion devices today. These facts should raise a flag that fraud and technology should be on the strategic radar as immense losses result from suspicious claims.

Technology is all around us, from self-driving cars and personable wearables, smart appliances and connected cities. All of these platforms push data into circulation — data that causes a shift in our psyche. This shift in psychology is also evident in the fraudster, and companies will need to adjust their strategies to face this new type of criminal effectively.

Technology has incredible advantages in the insurance world, but it also increases the disconnect a customer has with their insurance company. Studies in criminology reveal that when an individual does not identify or “feel” their victim, then a crime is more likely to ensue. With claims automation and advancements occurring in the insurance space, this also creates more detachment with customers, which translates into making it easier for them to commit fraud on a psychological level as there is no identifiable victim.

From a purely psychological perspective, technology will breed more fraud as this detachment will make fraudsters feel “ok” about committing these suspicious acts. Carriers are also at a disadvantage when we consider how technology itself will result in increased fraud. Fraudsters can leverage technology and take advantage of the immense data in circulation by altering their tactics; they often choose to engage in low-dollar claims but in higher frequency to remain off the radar of most companies’ claims handling thresholds for fast track and no-touch handling.

Another example rests in video verification; many companies use remote video to verify damage, such as allowing an insured to FaceTime property or vehicle damage and then fast-track the payment. This format has incredible potential for fraud as there are few or no touch points with the company.

Leveraging technology
But all is not gloom and doom as carriers can meet the challenge and leverage the technology tools available to them. The most successful and effective carriers are utilizing technology platforms to thwart efforts and are doing a very good job at it! What specifically can carriers do?

Here are some of my top tips based on examining dozens of highly effective companies.

  • Companies can become significantly more efficient by using technology platforms for fraud detection, whether they utilize advanced machine learning (ML)/artificial intelligence (AI) technology or other more simplistic approaches. These tools can filter and screen an incredible amount of data very quickly, a task that would be impossible to accomplish manually.
  • Many platforms have multiple capabilities, such as optimizing processes in a low-touch environment and scanning for fraudulent claims. This is a beautiful strategic pairing as carriers accomplish plugging the holes of the leaky fraud faucet and take care of honest customers (by fast-tracking) at the same time.
  • Get back to basics and perform training! Believe it or not, this approach helps to keep fraud fresh in the minds of the employees and helps to create a strong front line defense. This is not a tech solution, but adding this to the counter-fraud arsenal will yield results.
  • Leverage technology platforms to predict future incidents that have not occurred using ML/AI functionality. In this manner, carriers can avoid risk before it occurs, which is the most desirable from a profitability standpoint.
  • Leverage technology to look for outliers in the data. In the counter-fraud banking world, fraud detection is based on developing a customer profile and then alerting the bank of any activity outside of the norm. This same approach can be used in the insurance industry; imagine if a certain sales agent wrote more policies on average than those in similar regions (actual case) and a technology platform helped to identify this “outlier” behavior. This would be a strong indicator to investigate further.

Technology is changing every aspect of our lives on a daily basis, and the fraudster’s mind is not insulated from this; their approaches and tactics will change to leverage technology to their advantage. But carriers can also fight a fair fight by also utilizing technology to level the playing field.



Michael Skiba (
Michael.Skiba@inform-software.com), also known as Dr. Fraud, is an international expert on economic crime. He worked in the insurance fraud industry for 22 years in claims and special investigations and currently consults with INFORM, an international claims and fraud solutions company. He is an accomplished author and recently published a book entitled “The Psychology of Fraud.”