Tackling fraud is among insurers’ main uses for Big Data, which is increasingly important to industry profitability and credit ratings, according to Fitch.

“Early adopters of Big Data to reduce fraud, price more accurately and control distribution may gain a vital competitive edge,” the ratings agency says.

Fitch cites a survey of insurers last year by technology consultant BearingPoint, in which 71% say Big Data is a “maximum priority” over the next few years, particularly for customer service, pricing and fraud detection.

“Insurers are making strides with Big Data analytics to identify correlations in claims data that may indicate fraud – correlations that were previously much harder to uncover,” the report says.

Hyundai Marine & Fire Insurance has lowered its fraud rate by 20% due to a system that analyses patterns across claims and policy conditions.

Searching social media can reveal links between claimants and apparently unrelated individuals. “This type of analysis has uncovered instances of motor ‘accidents’ staged by the participants to trigger false whiplash claims.”

AIG, in partnership with analytics business Mu Sigma, has introduced “heat maps” to its fraud detection system that single out certain claims to be investigated.

Fitch says the insurance industry has been slower than others to make use of Big Data.

About 73% of insurers in BearingPoint’s survey say they are some way off properly exploiting it.

Big Data analytics is widely used in motor pricing, through the use of telematics devices that track drivers’ mileage and braking habits.

Telematics can promote safer driving. In Europe, insurers sold 4.6 million telematics-linked policies last year, up 240% since 2012, according to Ptolemus Consulting Group.

Insurers also use Big Data for catastrophe risk assessment, tailored customer engagement and analysing distribution channels with intermediaries.