Two leading defendant law firms have rolled out automation tools to cut costs for insurer clients, one to deal with fraud investigation and the other an extension of a ‘virtual defence lawyer’.
Horwich Farrelly has launched ‘Car Wash’, which it describes as the first fully automated fraud investigation solution.
With the resources required to review potentially fraudulent claims often onerous and the costs to outsource investigations also high, it said Car Wash saved the insurance industry over £2.4m for cases the firm concluded in 2018.
Horwich Farrelly said Car Wash compares claims against a wide range of data from a variety of sources to reveal a series of ‘red flags’ that enable further investigation of those deemed most likely to be fraudulent.
The system considers over 30 potential indicators of fraud, including MOT history, mileage data, road tax records, change of keeper dates and car adverts – as well as Horwich Farrelly’s own historical fraud data – within an insurer’s database of claims.
Since first being piloted in January 2018, over 50,000 claims have been run through the system, detecting 4,500 potential frauds.
Rick Preston, head of Horwich Farrelly’s intelligence team, explained: “Since 2017 we had been investigating how we could combine the wide variety of data sources that help us to identify fraudulent claims in a much more streamlined way so as to speed up the process and reduce client cost.
“We saw a growing number of positive matches on credit hire claims that were the result of intelligence searches against commonly used vehicle databases. We therefore used this insight to create a product that would interrogate every claim, automatically.”
Mr Preston said that even simple things, such as if a claimant’s car passed an MOT during hire, but that they still continued to hire for another month, could be a strong indicator of fraud.
“Car Wash has, even in cases where the insurer believes nothing else will be found, achieved significant cost savings and, as more claims are withdrawn, the savings will only increase.”
Meanwhile, City firm Kennedys has issued the fourth version of its ground-breaking virtual defence lawyer, KLAiM, which it first launched in 2012.
KLAiM is used by large clients, such as insurance companies and local authorities, to manage claims worth up to £25,000 from service of proceedings to settlement and so avoid the need to spend money on lawyers for such cases.
Kennedys said clients were settling in excess of 80% of their claims inside the system without the need for a lawyer at all.
KLAiM has now been adapted to work across Kennedys’ international network including the USA, Bermuda, Hong Kong and Australia.
A new feature of KLAiM, in the UK, is Kollect – a tool that allows insurers to seek recoveries of their own losses direct from third parties without the need for lawyers.
Partner Richard West, head of innovation at Kennedys, says: “Innovations such as KLAiM are central to our core principle of helping clients to use lawyers only when they really need to.
“Although seemingly counter-intuitive for a law firm, we believe that this approach offers business benefits for both our clients and ourselves.
“This has helped us to continue to build relationships with our clients and to also gain additional market share; while helping all new clients to also rapidly reduce their reliance on all lawyers.”