How Insurers are Fighting Advanced Fraud and Advanced Analytics

Tackling fraud isn’t new for insurers; most have been using SIU organizations for decades. However, fraud is taking on new characteristics, and attempts at fraud are increasing in frequency. Compounding this, insurers are implementing low-touch handling for less severe and more frequent claims, thereby increasing the potential for fraudulent activity.

Claimants are increasingly using photos at first notice of loss (FNOL) submission for auto physical damage and property claim handling. Photos can easily be copied or modified, adding a new dimension to the fraud landscape. The claim may be real, but the damage may also be digitally inflated. The complexities of the US healthcare system create additional opportunity for medical fraud by providers and claimants. Health conditions not covered by traditional healthcare plans may become part of an auto liability or workers’ compensation claim. Most workers’ compensation claims are real; however, the frequency of medical buildup is increasing.

Carriers are responding to the increased sophistication and scale of fraudulent actors by enhancing their own fraud analytics capabilities. Current solutions have the sophistication to identify components of fraud within valid claims as well as to identify individual and widespread illegitimate claims. Prominent providers include BAE Systems NetReveal Property & Casualty Insurance Fraud, DXC Fraud Analytics Suite, FRISS, Mody Data Solutions, SAS Detection and Investigation for Insurance, Shift Technology, and Verisk ISO Claim Solutions.

Carriers planning to expand digital transformation of claims should consider an ongoing investment in fraud analytics; embedding these tools in claims and SIU workflows can maximize their value. More information is available in Novarica’s recent brief, Claims Fraud Analytics: Overview and Prominent Providers, which provides an overview of fraud in the insurance industry and claims fraud analytics vendors.

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