The Ongoing Challenge of Insurance Fraud and a New AI Solution

Despite the emergence of innovative insurtech companies like Lemonade, Alan, Clearcover, and Pie, which are leveraging technology to modernize risk mitigation, insurance fraud remains a persistent problem. A French startup is now announcing funding to address this issue with advanced AI technology designed for both established and new insurance providers.

Shift Technology's AI-Powered Fraud Detection

Shift Technology offers a suite of AI-based SaaS tools to insurance companies. These tools scan for and automatically identify potential fraud scenarios across various applications. These include claims fraud, claims automation, underwriting, subrogation detection, and financial crime detection.

The company has recently secured $220 million in funding. This capital will be allocated to expanding its presence in the property and casualty insurance market, where it currently holds a strong position. Furthermore, the funds will support expansion into the health insurance sector and accelerate growth within the U.S. market. Shift Technology also provides solutions for the travel insurance industry.

Investment Details and Company Valuation

This Series D funding round was led by Advent International, through Advent Tech, with participation from Avenir and other investors. Existing investors, including Accel, Bessemer Venture Partners, General Catalyst, and Iris Capital – all of whom participated in Shift’s 2019 Series C round led by Bessemer – also contributed.

With this latest investment, Paris-and-Boston-based Shift Technology has raised a total of $320 million. The company’s valuation has now surpassed $1 billion.

Current Customer Base and Data Analysis

Shift Technology currently serves approximately 100 customers in 25 countries. Notable clients include Generali France and Mitsui Sumitomo. The company has analyzed nearly two billion claims to date, utilizing this data to refine and enhance its machine learning algorithms.

The Scale of the Problem and Evolving Fraud Tactics

The Coalition Against Insurance Fraud estimates that fraudulent claims in the U.S. alone total at least $80 billion annually, though the actual figure is likely much higher. The shift towards more virtualized processes has inadvertently created opportunities for malicious actors to exploit vulnerabilities in claims filing.

Additionally, the growth of the insurance market, coupled with increasing financial hardship among individuals, has contributed to a rise in desperate and unlawful attempts to gain financial advantage.

Market Growth and Competitive Landscape

The global market for insurance fraud detection technology was valued at $2.5 billion in 2019 and is projected to reach $8 billion by 2024.

Beyond companies specializing in claims management, such as Brightcore and Guidewire, many insurtech startups are integrating their own AI-driven fraud protection measures. We can anticipate further development of fraud protection services, potentially emerging from fintech and financial crime prevention sectors.

Statements from Shift Technology and Advent International

Jeremy Jawish, CEO and co-founder of Shift Technology, stated, “The entire Shift team has worked tirelessly to build this company and provide insurers with the technology solutions they need to empower employees to best be there for their policyholders. We are thrilled to partner with Advent International, given their considerable sector expertise and global reach and are taking another giant step forward with this latest investment.”

He further added, “We have only just scratched the surface of what is possible when AI-based decision automation and optimization is applied to the critical processes that drive the insurance policy lifecycle.”

Thomas Weisman, an Advent director, commented, “Since its founding in 2014, Shift has made a name for itself in the complex world of insurance. Shift’s advanced suite of SaaS products is helping insurers to reshape manual and often time-consuming claims processes in a safer and more automated way. We are proud to be part of this exciting company’s next wave of growth.”

Benefits for Incumbent Insurers

A key benefit of Shift Technology’s solution is its ability to help traditional insurance providers adopt new tools and services. This allows them to improve their profitability and effectively compete with the technology developed by newer, more agile companies.