The insurance industry has long been considered a quiet player in the fight against financial crime. But as fraud, sanctions, and sophisticated money laundering schemes rise, the sector can no longer afford to lurk in the shadows.
In a recent webinar hosted by SymphonyAI, entitled “Regulators, risk & reinsurers: AML’s new frontier”, industry experts explored how insurers and reinsurers can stay ahead in an evolving AML landscape, the transformative role of technology, and offered practical guidance for insurers and reinsurers navigating this complex landscape.
The session featured a panel of industry experts: Charmaine Simmons, Financial Crime and Compliance Expert at SymphonyAI, Martina Cont, Head of Process and Operations at Generali Group, and Mario Menz, Deputy Chair of the Institute Committee.
Rising operational risks
While insurance may not always be the first sector that comes to mind in anti-financial crime discussions, operational gaps and outdated processes create significant exposure.
Fraud, in particular, remains a major concern, affecting premiums and claims processing alike.
As Menz explained, “One in every 100 insurance claims is a fraudulent insurance claim.”
He highlighted the FCA’s £7.8m fine against JLT Specialty Limited in 2022, where weak financial crime controls allowed over $3m in payments to overseas government officials.
Effectively, these were bribes sed to secure and retain business for the company, underscoring the serious consequences of insufficient oversight and due diligence on intermediaries
Simmons concurred, adding, “The risks are rising not just because of smarter criminals, but also due to outdated processes and controls within insurers themselves.”
Navigating complex distribution models
Global operations and intermediary networks introduce additional blind spots. Cont noted, “The challenge is to produce a compliance framework and controls that are effective but without creating frictions with the operation.”
She highlighted that collaboration between control functions and business operations is key to translating high-level regulatory requirements into practical operational models.
Simmons also observed, “Written policies are not enough; we need to ensure that day-to-day operations reflect our compliance intentions,” pointing to the human factor in effective AML implementation.
How technology can accelerate the process
AI and automation are reshaping AML practices, from detecting risk triggers to improving sanctions screening.
Menz commented, “Firms are starting to use AI to identify red flags and risk triggers that may potentially lead to fraud or money laundering.”
Cont affirmed this belief, shared practical results from Generali: “Using machine learning, we have been able to reduce false positives by more than 20%, freeing our teams to focus on the most critical alerts.”
Simmons noted that while some processes remain paper-based, AI adoption is accelerating across the sector, enhancing both detection and efficiency.
Future-proofing your strategies
Emerging threats such as synthetic identities and deepfakes require flexible, forward-looking strategies.
Cont emphasised, “We must be prepared, not just compliant. The world is evolving, and we need to move with it.”
While the core risks, fraud, sanctions, and money laundering, remain largely the same, insurers and reinsurers must continually evolve their detection and mitigation strategies to keep pace with emerging threats.
But despite the need to hasten the adoption of technology into the AML process, Simmons felt the need to reinforce the importance of integrating technology with human oversight, remarking, “AI is a tool, but human judgment remains crucial, especially during investigations and complex decision-making.”
By integrating technology, fostering collaboration across teams and intermediaries, and anticipating regulatory trends, insurers and reinsurers can transform AML compliance from a regulatory obligation into a strategic advantage, safeguarding both their business and the wider financial ecosystem.
Watch the full webinar from SymphonyAI here.
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