The insurance industry is one of the most important industries in an economy-not only does it provide a respite for individuals when they face financial losses, medical expenses, or retirement, but it also helps governments finance development initiatives to keep the economy stable.
In addition, insurance payments prevent businesses from bankruptcy and help keep essential employees at work. The insurance industry even has a hand in bringing food to our tables, as agri businesses rely on insurance payments to keep their fields and farms open despite floods, droughts and other natural disasters.
All of this means that insurance companies collect, process, and store sensitive information of millions of policyholders, making processing insurance claims an arduous and time-consuming task.
These companies receive thousands of insurance claims each year, and the amount of data to be processed and reviewed has created major bottlenecks in their due diligence process.
Sensing this vulnerability, offenders are filing an increasing number of fraudulent claims each year, with relative success, resulting in insurance fraud close to $80 billion annually.
That said, insurance providers are now looking for better, more holistic ways of investigating insurance claims. SAS Detection and Investigation for the insurance industry might be the tool they need.
When people think of insurance fraud, they assume that only the insurance companies are affected, though in reality, the repercussions affect every single policyholder paying premiums.
Successful fraudulent claims increase the premium for policyholders across all different insurance schemes. In the USA, for example, insurance fraud costs an average family between $400–$700 a year.
They also lengthen the review process of all insurance claims, increasing the waiting period for deserving customers, who require swift insurance payouts—leading to loss of customer loyalty, and ultimately, revenue.
Across the world, insurance fraudsters use different methods to manipulate the insurance claim due diligence process. In Europe, insurance fraud is an organised crime by gangs.
In other parts of the world, fraudulent insurance claims involve individual claimants inflating the value of their losses or damages to receive heftier payouts. Ghost broking is another emerging type of insurance fraud, where fraudsters target a single type of insurance product.
Although the traditional claim review process identifies the common traits of insurance fraud, it takes a considerable amount of time, and some claims can eventually slip through the cracks.
Traditionally, claim investigation units hold data related to all insurance claims, including historical claims data, policy details, and specifics related to the particular claim. These units operate independently of similar teams from other insurance providers, creating a data silo.
If fraudsters target new insurance providers for their claims, the lack of integration between different claim investigation units means that these claims may get approved without information on historical claims from other providers by the insurer.
Anti-fraud systems like SAS Detection and Investigation for Insurance help improve integration between departments of insurance providers, improving information availability across the industry.
Improved data availability means investigation units can identify obvious common traits of fraudulent claims across the entire network and flag fraudulent claims—reducing the probability of a fraudulent payout.
These systems can also help enforce a holistic due diligence process and help achieve the two primary objectives of insurance claim investigation; detect and flag fraudulent claims for an in-depth review, and approve legitimate claims of customers in need.
Insurance fraud is becoming an increasingly common occurrence, with one in ten claims being fraudulent.
In this vulnerable landscape, insurance providers need to work together and open up their data silos to enforce a robust claims investigation process across the industry.
Data analytics tools like SAS Detection and Investigation can streamline this process by reducing fraudulent claims and speeding up the review process, leading to high customer satisfaction and loyalty.