The digital age has created new opportunities for an old, persistent parasite to flourish within insurance: fraud. Each year, fraud costs insurers (and their policyholders)
Proactively strengthening defenses against emerging threats is crucial, and I believe online data is our single greatest weapon in the fight against current and future fraud.
Digital data sources offer streamlined processing, reduced delays and the collection of crucial evidence to prevent fraud. Yet despite these benefits, insurers often struggle to understand where to start and best practices for effectively using data to their advantage. The first step? Understanding the current fraud landscape to identify discrepancies with data.
Fraud: The modern landscape
While traditional methods of insurance fraud like staged accidents or inflated claims still persist, the digital age has created new opportunities for fraudsters. Online or in-app interactions remove the face-to-face element that used to be standard practice in adjustment, making it much more cost-effective but harder to detect inconsistencies through physical verification. This demands a more robust data strategy from insurers. By integrating advanced intelligence that pulls corroborative or contradictory information from a claimants' publicly available online presence, they can not only accelerate their time to resolution but better anticipate and identify emerging schemes, staying ahead of the curve and ultimately combating fraudulent activities more effectively.
Data as the key
Effective data usage plays a crucial role in creating a proactive hedge against most forms of fraud. Traditionally, investigating potential fraud or sourcing trustworthy service providers involved adjusters spending significant time manually searching social media and the web. However, the vast amount of data available online makes this process inefficient and prone to inconsistencies. Data-driven solutions address this challenge by leveraging sophisticated AI algorithms to analyze and organize this data. This allows us to predict where the most relevant information resides, saving adjusters valuable time. By automating this research, adjusters are freed up to focus on their core strengths: investigating policy coverages, determining liability, accurately valuing claims, negotiating settlements and efficiently resolving claims.
The world isn't getting any less digital, and that growth creates even more potential for data-driven solutions that listen to the digital world for signals of foul play — whether it's unraveling intricate webs of associated claimants and service providers or providing a more holistic view of a claim from start to finish. By offering a comprehensive perspective on each claim, these solutions uncover important trends, allowing claim handlers to make well-informed decisions quickly and confidently. The result is a reduction in claims costs through enhanced trusted vendor programs and a more efficient vendor research process. Adopting such tools can be a wise move for insurers looking to boost efficiency, reduce fraud, and enhance customer satisfaction in claims processing.
The difference real-time alerts can make
Data-based fraud prevention systems can learn, detect and address fraudsters' most current and sophisticated methods and notify claims adjusters when it identifies suspicious activities or potential fraud. But this is only possible with data-informed insights. Prompt alerts ensure the appropriate personnel are informed in a timely manner, intervening and alerting adjusters right from the first notice of loss in the claims process.
For example, one of our UK-based customers had a policyholder claim his £7,800 ($10,000) Rolex Wimbledon watch was stolen during an armed robbery. The claim was investigated after he provided conflicting information to the insurer and police. When asked how he paid for the Rolex, the fraudster provided various handwritten sales invoices for second-hand vehicles. Industry-wide searches promptly discovered that all the invoices had been faked, and the policy was immediately terminated.
These types of situations are common occurrences and early intervention is crucial to preventing the progression of fraudulent claims. In fact, our data-based fraud prevention system helped this same UK-based customer save £15.5 million ($19.9 million) across fraudulent property claims in just one year — an average of £19,058 ($24,462) for each case identified. By identifying and addressing fraudulent claims early in the process, data can be used to generate real-time alerts, helping insurance carriers minimize operational costs associated with investigating and processing fraudulent claims.
Ultimately, the goal of integrating new and better sources of data is to identify fraudulent activity before a single payout is issued. This not only saves financial resources for the insurance company but also helps maintain the integrity of the claims process. With data as their shield, insurers can build a more secure and efficient future for all.
