Fraud is an ever-present threat to insurance companies. Most estimates place the impact of fraud at 10% of premiums, and that leads to billions of dollars in losses every year. Every time we think we are starting to catch up to the latest fraud efforts, new schemes pop up to take advantage of our industry. The real problem is that most traditional fraud detection methods happen after the payment, which creates a “pay and chase” situation resulting in expensive recovery efforts.
Fortunately, the pace of change in technology may be turning the tide, allowing insurance companies to gain a leg up on sniffing out the potential fraudsters. It’s time for carriers to stop being the victim and to look at all options available to stop these losses. New methods of fraud detection are emerging that help insurance companies detect fraud before the payment has occurred, leading to fewer paid claims and better outcomes:
- Automobile accidents are a huge target for fraudsters. Inflated claims, added passengers, and phantom injuries are all part of the problem. However, telematics can provide real-time first notice of loss, expediting the claim filing and investigative processes. Telematics data can also help re-create accidents and make sure damages are legit.
- Home insurance fraud is a major nuisance for carriers, from staged fires to vandalism and even to false disaster claims. Artificial intelligence-enabled property inspection systems mitigate these problems by providing more accurate property descriptions for underwriting and detailed property inspections during claim time. The availability of aerial imagery benefits both the underwriting and claims sides, helping to verify property conditions during the lifespan of the policy.
- Life insurance seemingly provides many avenues for potential fraud. From intentional errors on the application to claims of fake deaths, the life insurance industry faces fraud on a daily basis. However, there are plenty of technology-based systems to help carriers. Application verification systems and technology that analyzes voice responses help identify potential fraud before the payment, while advanced data mining can help root out potential fraud after the policy is written.
- False medical claims are a sore spot for many types of insurance carriers, but technology is leveling the playing field here as well. Advanced analytics help identify anomalies in treatment plans and help verify needed medical procedures, while data mining efforts help find potential fraud in existing books of business.
Ultimately, defeating fraud will require “all hands on deck,” and carriers must wake up to the fact that current efforts will not be enough. But the tools are out there, ready to implement, if you just take the time to look.
Don’t miss getting the scoop on advanced fraud detection techniques from many exciting companies at InsureTech Connect 2019, September 23 to 25, in Las Vegas. The Aite Group insurance analyst team will be there in full force to keep a watchful eye on the industry and the changes occurring in the insurtech community. Aite Group is happy to partner with ITC and provide you with a $200 discount. Click HERE to register.
And, if you are ready to focus on fraud, you won’t want to miss the private Aite Group panel discussion and networking breakfast, The Future of Fighting Insurance Fraud: Using Data to Combat Fraudsters, on Tuesday, September 24, at the MGM Grand. This 90-minute seminar will be broken into two panels focusing on life insurance fraud and P&C insurance fraud, showcasing various carriers and vendors.