Munich Re validates start-up Fraugster's AI-based platform

Munich Re has tested and insured the fraud prevention solution of German and Israeli start-up Fraugster, which uses artificial intelligence (AI) technology to detects payment frauds and improve the security of online sales.

Fraugster has developed an algorithm that checks in milliseconds whether online payment transactions are fraudulent, allowing online sellers to approve transactions faster and more reliably.

Munich Re’s data analysts have tested Fraugster’s self-learning algorithm, and is insuring it against the transactions that are wrongly deemed legitimate.

The insurance solution was provided via Munich Re’s subsidiary Great Lakes Insurance.

According to the company, online sales currently generate around €2 trillion in revenue worldwide, and are growing at a rate of roughly 25 percent per year. Credit card frauds causes online sellers to lose around €25 billion per year, or an average of 1.5 percent of annual revenues.

Max Laemmle, founder and CEO of Fraugster, said: "With several million transactions passing through Fraugster’s system each day, our AI technology ensures that the product offered is very secure. The cooperation with Munich Re will make a significant contribution to our new AI-based product reaching e-commerce markets around the globe."

Doris Höpke, board member for special and financial risks, commented: "The ever-growing volume of online sales means that there is great demand for better security. Fraugster and Munich Re’s Special Enterprise Risk Team have joined forces to provide this security through an innovative type of risk appraisal and a tailored insurance solution. This solution is creating macroeconomic value by reducing sellers’ costs and increasing their revenue and efficiency."

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