Contents
Why insurance is a prime target for fraudsters
Regulatory obligations for insurers
How to strengthen compliance and fraud detection
AP Solutions IO: a partner to secure your operations
A sector under pressure, an essential technological response
Insurance scams are on the rise: false contracts, inflated claims, simulated indemnities... Vigilance is more important than ever.
(Introduction)
Insurance Europe estimates that fraud accounts for around 10% of claims expenditure in Europe, whether detected or not. This fraudulent overactivity affects all segments of the life, health, motor, property...
For you, executives and compliance officers, the stakes are twofold: protect your profitability and preserve policyholder confidence, while responding to growing regulatory pressure on insurance and compliance fraud.
This fourth episode sheds light on the roots of these risks, the obligations that structure your response, and the technological levers for strengthening your compliance in the insurance sector. Discover also how AP Solutions IO tools enhance your defenses with agility and precision.
Why insurance is a prime target for fraudsters
Insurance has become an ideal playground for fraudsters: massive flows, a variety of products, from life insurance to car insurance, and a system based on risk pooling. When fraud enters this system, trust wavers.
Fraud, whether detected or not, is estimated to cost honest insurers and policyholders around €13 billion a year, an invisible burden with far-reaching consequences.
Life insurance: an easy entry point for illicit money
Life insurance policies can be used to launder dirty money. Fraudsters take out policies with dubious funds, then trigger surrenders or arbitrages, transforming illegitimate funds into legal withdrawals. The scheme bypasses conventional verification protocols.
Claims: operational levers of fraud
Fraud doesn't stop at life insurance: claims are just as exploited, with operations that are often more concrete... but just as pernicious:
- Misrepresentation
- Invented accidents
- Amplified claims...
Regulatory obligations for insurers
Life insurance remains one of the few financial products explicitly covered by the European AML/CFT framework, and rightly so. Directive (EU) 2018/843 clearly designates life insurers as entities subject to AML/CFT. You must now apply rigorous, demonstrable standards to every transaction.
KYC programs and enhanced vigilance
In the insurance sector, knowing your customer is no longer a simple form to tick off. KYC (Know Your Customer) is becoming an active lever for risk detection. It's no longer just a matter of identifying a name, but of understanding who is really behind each contract, and what intentions may lie behind them.
As soon as a profile shows signs of complexity (beneficiary of an investment product, unclear origin of funds or political exposure, etc.), vigilance must be stepped up. This in-depth monitoring, known as EDD (Enhanced Due Diligence), is not limited to an initial check. It's a long-term process: every change in situation, every atypical transaction, needs to be put into perspective.
It is this ability to adjust the level of scrutiny to the actual context that makes the difference between mere regulatory compliance and a true compliance posture. In an environment where fraudsters know how to cover their tracks, only up-to-date, cross-referenced and contextualized data can keep you one step ahead.
Active transaction monitoring
Vigilance doesn't stop when you take out a policy. Ongoing monitoring is essential, with systematic filtering of sanctions and exposed profiles (PEP) at every stage of the insurance relationship.
Governance, controls and sanctions
EIOPA reinforces its framework with strict governance guidelines:
- Internal Audit
- Reporting mechanisms
- Systematic conformity check
In the event of serious breaches, the European authorities have the right to withdraw a license, as recommended by the joint ESA report.
How to strengthen compliance and fraud detection
Insurance fraud often occurs in the blind spots of business processes. To counter this, it is essential to activate a number of levers right from the first contractual exchanges:
Behavioral scoring at the subscription stage
Contextual analysis of the profile (type of contract, customer history, subscription channel) enables weak signals to be detected at an early stage. This dynamic scoring prioritizes risks and targets relevant controls.
Real-time detection of deviations
Unusual transactions, dubious beneficiaries or sudden variations: any suspicious behavior automatically triggers an alert, without manual intervention.
Automated filtering and centralized documentation
Customer data is automatically cross-referenced with lists of sanctions, PEPs or risk zones. All compliance data is recorded and accessible in the event of an ACPR or EIOPA inspection.
These practices strengthen your defenses against insurance and compliance fraud, while streamlining your processes.
AP Solutions IO: your partner for secure operations
Strengthen your LCB-FT insurance systems without slowing down your teams: that's the challenge taken up by AP Solutions IO. The French RegTech company designs compliance solutions that integrate discreetly with your business tools, while ensuring rigorous, documented control.
Its software suite is based on transparent, traceable intelligence(Glass Box) to ensure the reliability of every decision. The result: active, automated compliance, perfectly integrated into your internal processes:
AP Scan
Real-time filtering of exposed customers, structures or operations (sanctions, PEP, sensitive areas), without manual re-entry.
AP Scoring
Evaluates each file using dynamic criteria: history, channel, product, country context. Alerts are prioritized according to risk level.
AP Monitoring
Monitor atypical behaviors as soon as they emerge: sudden spikes in activity, repeated inconsistencies, unusual requests...
All data is centralized and historized, ready to be restored in the form of reports that can be used by the ACPR or TRACFIN. So you stay on top of your obligations, while staying one step ahead of fraud.
A sector under pressure, an essential technological response
Insurance fraud is no longer an isolated issue. It is now a systemic issue, where the amounts involved, the diversity of products and the complexity of distribution networks create fertile ground for illicit practices.
This reality places greater responsibility on insurers and compliance managers to prevent abuses without curbing business.
We have highlighted the main vulnerabilities in the sector, the requirements imposed by the AML-CFT insurance framework, and concrete solutions to strengthen your lines of defense.
A clear direction is emerging: that of intelligent, proactive compliance, capable of countering new forms of fraud.
The answer is not only regulatory, but also technological. By integrating AP Solutions IO tools, you, the insurance industry, can combine operational efficiency, legal security and organizational resilience.
Faced with an ever-changing landscape, where fraudsters innovate as much as regulators, it's time to equip your teams with the right resources.
What if you opted for agile, discreet and sustainable compliance today?
Contact AP Solutions IO to build a defense system that meets the challenges ahead!
