How to cut through the web of insurance fraud
As many insurers know, the web of insurance fraud grows rapidly. Opportunistic and organized fraud can quickly be spun into inflated claims damage, exaggerated injuries, staged accidents and overpriced auto body repairs that can sneak up to take a bite out of balance sheets. Insurance companies can become entangled by investigation inefficiencies, high loss adjustment expenses and incorrect payments, and that’s not even accounting for the inconvenience to policyholders who simply want their legitimate claims resolved.
Becoming caught in this web is costly. For example, in the United States alone, the estimated cost of property and casualty fraud each year is a hair-raising $32 billion, according to the Insurance Information Institute. Worse, 51 percent of insurers surveyed by the Coalition Against Insurance Fraud believe that suspicious activity is on the uptick. As increasingly sophisticated criminals perpetrate ever more complex acts of fraud, limited in-house resources and fixed budgets for antifraud solutions can be enough to trap any insurance company.
What are your organization’s sticking points?
When you combat insurance fraud, do you rely too much on tips and adjuster intuition? That’s not to downplay either one—after all, a 2014 Global Fraud Study found that more than 40 percent of fraud investigations are triggered by tips. But tips and intuition are not sufficient to combat fraud on their own, especially as fraud builds volume and grows in complexity. To combat new threats, insurers must adopt the latest advanced, automated and proactive approaches to fraud detection.
Multiple disconnected systems pose another obstacle to companies that want to fight back against insurance fraud, not least because integration of data from disparate internal and external sources is integral to making the connections that can help such companies detect and prevent fraud. Worse still, many insurers lack the tools they need to sift through, let alone analyze, the tremendous volumes of widely disparate data to which modern companies have access.
Cut through the web of insurance fraud
Are you hunting for ways to begin fighting back against insurance fraud? IBM Counter Fraud Management can help you capitalize on four best practices:
- Detect: Score and rescore claims using rules and multiple analytical fraud models as part of your business process—allowing you to avoid pay-and-chase situations through early detection of potential fraud.
- Respond: Use deep insights to help you take the next best action for a claim, differentiating legitimate actions from suspicious ones while responding quickly to criminal patterns and activities.
- Investigate: Turn fraud intelligence into action, using deep inquiries into suspicious activity to compile evidence and build cases.
- Discover: Facilitate learning and enable continuous improvement in fraud detection by analyzing historical data, assessing patterns and building watch lists of potentially fraudulent individuals and organizations.
Approach counter fraud from a new angle
Fraud not only triggers financial losses and causes operational costs, but it also erodes consumer confidence, harms brand image and diminishes a business’s potential for core innovation. Insurers must adopt a holistic approach that can help them anticipate and proactively respond to threats.
IBM Counter Fraud Management is a next-generation offering delivered as a single, integrated solution, and it aims to address every phase of enterprise counter fraud measures. Designed as a multilayered ecosystem of tightly woven analytical techniques, IBM Counter Fraud Management can help organizations eliminates their information silos, expanding their observation space and enable unified enterprise business intelligence.
Set out on your counter fraud management journey by reading this infographic, then discover how you can take action with advanced analytics to predict, detect and investigate fraud.