KUALA LUMPUR (Oct 30): A fraud intelligence system (FIS) will be introduced by the insurance industry, together with BAE Systems, in August next year to provide insurance companies and takaful operators with the ability to detect and investigate insurance fraud.

ISM Insurance Services Malaysia Bhd chairman Kong Shu Yin said a pilot run for the FIS, which was launched today on the sidelines of the Seventh Malaysian Insurance Summit by Bank Negara Malaysia Governor Tan Sri Muhammad Ibrahim, has already commenced last month involving four insurance companies in Malaysia.

"The first phase of the FIS will focus on motor insurance alone and will be rolled out to the whole industry [gradually]," he told a news conference in conjunction with the event.

He added that the insurance industry has invested over RM10 million in the FIS.

"It very sophisticated system, making use of big data analytics and combined with the experience of insurance executive claim examiners... together we can combat insurance fraud," he said.

Kong also said the insurance industry has paid out in 2016 a total of RM5.8 billion in motor claims itself

"[Research] has shown that 10% of those claims is estimated to be fraudulent. If you take 10% of RM5.8 billon, that is a whopping RM580 million lost due to insurance fraud.

"Now we are moving into de-tariff pricing which is a good and bad thing as any savings will be passed down to the consumers, along with the costs too," he said.

"So, any insurance fraud will add on to costs, which will be passed down to consumers, that's why we are very serious in coming out with the system to combat insurance fraud," Kong added.