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Fraud prevention for international travel health insurance with ICO.Link

Successful pilot project

One bill, ten refunds. Multiple billing is one of the simplest fraud methods of all. No prior knowledge required, little effort, almost zero risk of detection. Fraudsters all too often become semi-professionals or even professionals. It is not uncommon for their fraud career to begin with fraudulent foreign travel health insurance. In order to prevent this at an early stage, an exchange between insurers would be necessary. However, this has so far failed due to a lack of digital innovation and supposedly insurmountable data protection and antitrust law requirements.

Foreign travel health insurance predestined for fraud

Travel health insurance is particularly vulnerable to multiple insurance fraud due to its low prices and the ease with which it can be taken out. This means that someone illegally takes out several foreign travel health insurance policies, travels abroad, receives treatment there, makes a claim and demands reimbursement from each of the insurance policies taken out, even though they only paid once when they were there.

Until now, there has been a lack of technical possibilities for recognising such cases of fraud systematically and yet in compliance with data protection regulations. When cases came to light, they tended to happen by chance. However, these cases showed that the vulnerability of not being able to exchange information with each other is being exploited more and more frequently. ICO.Link prevents this.

First systematic investigation into multiple insurance fraud in the history of the insurance industry

An effective fight against cross-insurance fraud requires a centralised solution. ICO-LUX has therefore launched the ICO.Link platform. This enables the comparison of benefit data for the purpose of fraud prevention in compliance with data protection and antitrust law, in that policyholder data never leaves the company thanks to innovative cryptography and can still be compared with each other thanks to ICO.Link.

To validate the ICO.Link solution developed, ICO-LUX 2022 teamed up with 18 renowned insurance companies to test the effectiveness of the platform. This already corresponds to a market coverage of 75%. Historical performance data was deliberately used in order to systematically analyse the extent of this scam for the first time. As part of the pilot project, a total of around seven million encrypted fingerprints from 650,000 claims were generated, transferred to the database and analysed for collisions (duplications).

Key results of the pilot study::

  • The innovative cryptography process implemented in ICO.Link was successfully trialled. A three-digit number of suspected cases of fraud in connection with multiple insurance was recognised. In addition, unlike other fraud defence solutions, the process did not produce any false positives.
  • The admissibility of the ICO.Link exchange under data protection law was confirmed. A criminally secure exchange on suspected cases - even between affected insurers - is possible for open benefit claims.
  • All but one of the companies involved are represented in the collision network, which means that duplications are frequent and can be recognised using the procedure.
  • The extent to which multiple submissions are recognised depends on the data quality that can be provided by the insurers. In companies with good databases, almost every 100th data record could be qualified as a multiple submission.
  • The fraud rate of 1% of claims is roughly in line with the estimates for fraud in other private health insurance products, which are generally estimated at between 1% and 10%.

Continuous development for the insurance and financial sector

ICO.Link is continuously being developed for products with higher benefit volumes and longer payout periods. The platform is already in use for legal expenses insurance and in the area of health and long-term care benefits. Banks can also use the solution to tackle the problem of multiple identities or multiple account openings and the associated cases of fraud and possible violations of the Money Laundering Act. 

What makes the ICO.Link platform and the innovative data encryption so special has already been discussed in the specialised press. Click here to go directly to the article in ‘Versicherungswirtschaft heute’: How to stop insurance fraud with cryptographic processes.

Any questions? 
Let's talk

Swantje Peter

+49 3641 92 90 988 sp@ico-lux.com