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SmartDiagnostics, a solution against mobile insurance fraud

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SmartDiagnostics, a solution against mobile insurance fraud

The telephone has become an indispensable device in our lives. We use it to communicate, for entertainment, to stay informed, to store our memories and a host of other uses. This has created a new niche market in the insurance sector, that of mobile insurance. Every day more and more insurers are offering packages to respond to the new needs of users, but new challenges arise in this new field.

At Future Space, we have our SmartDiagnostics tool as a solution against mobile insurance fraud. It is a tool that allows the automatic assessment of the user's mobile device. With this we can verify the internal state of the terminal (battery, accelerometer, etc.) and the integrity of the screen using different Machine Learning models.

The insurance industry and mobile insurance

The insurance market, in general terms, has been experiencing a rise in fraud statistics for more than a decade. If we focus on mobile insurance, the trend is similar, and sometimes even higher. It is such a case that many insurers have stopped offering this type of policy due to the high insecurity of online appraisals and the costs associated with a physical appraisal of the device. But when does this type of fraud occur and, more importantly, can it be substantially tackled?

insurance fraud

Regarding the timing of fraud, it generally occurs in three phases of the insurance life cycle. The moment when most fraud is committed is at the time of reporting the claim, and within which we can distinguish two types of fraud:

  • Indirect fraud, which corresponds to customers who start a claim report but when requested by the insurer, cancel the report or close the policy.
  • And direct fraud, where evidence and investigations lead investigators to conclude that the claim is a fraudulent claim.

The second phase where most fraud is committed is during the contracting period. Typically what happens at this stage is that the individual provides false information about the status of the device, or the device itself (model, imei, colour, etc.).

The third moment with the highest risk of fraud would be during the delivery of the handset. On this occasion, the problem is usually related to the contracting phase; if the data collected are not correct, it is easy to hand over a different or similar handset to ours. Another case may be to hand over a handset with damages caused on purpose in order to collect the insurance.

SmartDiagnostics on mobile insurance fraud

How can we tackle this fraud and control the expertise to make the contracting process as safe and risk-free as possible?

As we have seen in the previous section, mobile insurance has brought new challenges to the insurance sector. And it is at this point where technology is key when it comes to making this type of insurance profitable. This is where SmartDiagnostics comes in, an application created by FutureSpace that performs a remote assessment of the mobile device. Thanks to this, it is possible to know the state of the terminal to avoid fraud during the contracting process or at the time of the claim. SmartDiagnostics works as an external application or in the form of an SDK integrated into the entity's application.

smartdiagnostic fraud

Once the insurer proceeds to fill in the policy report, the user would log into the application and follow the corresponding steps. These steps consist of 3 types of tests:

  • The first is an automatic one that checks the status of the phone's sensors (wifi, network, brightness, storage, etc.).
  • A second phase in which the user must carry out manual tests to check the operation of the touch sensor, usb, jack cable, etc.
  • Finally, we would move on to the parameter that generates the most fraud, the screen. A large part of the problems with these insurances is fraud when it comes to presenting a crack in the screen. This factor is solved by the third test carried out by SmartDiagnostics, which checks the integrity of the glass and determines the number of cracks in the screen.

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