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Loss risk through fraud in car insurance

Author

Listed:
  • Mercedes Ayuso

    (RFA-IREA, Departament d’Econometria, Estadística i Economia Espanyola, Avda. Diagonal 690, 08034 Barcelona)

  • Montserrat Guillen

    (RFA-IREA, Departament d’Econometria, Estadística i Economia Espanyola, Avda. Diagonal 690, 08034 Barcelona)

  • Catalina Bolancé

    (RFA-IREA, Departament d’Econometria, Estadística i Economia Espanyola, Avda. Diagonal 690, 08034 Barcelona)

Abstract

Our objective is to analyse fraud as an operational risk for the insurance company. We study the effect of a fraud detection policy on the insurer's results account, quantifying the loss risk from the perspective of claims auditing. From the point of view of operational risk, the study aims to analyse the effect of failing to detect fraudulent claims after investigation. We have chosen VAR as the risk measure with a non-parametric estimation of the loss risk involved in the detection or non-detection of fraudulent claims. The most relevant conclusion is that auditing claims reduces loss risk in the insurance company.

Suggested Citation

  • Mercedes Ayuso & Montserrat Guillen & Catalina Bolancé, 2011. "Loss risk through fraud in car insurance," Working Papers XREAP2011-08, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2011.
    • Handle: RePEc:xrp:wpaper:xreap2011-08
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    File Function: Revised version, 2011
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    References listed on IDEAS

    as
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