17 Percent of the Insurance Industry Moves into the 21st Century
“If I can identify [fraud] and get the claimant into the office for an interview within the first seven days, then the perpetrator and his cohorts don’t have a lot of ’skin in the game,’ so to speak.”
That’s Dennis Parker in Insurance and Technology, talking about the insurance industry’s need for speed in identifying potential fraudulent claims. Formerly with Infoglide Software, Dennis is now an insurance marketing manager at SPSS.
Dennis and his team at SPSS use their predictive analytics solution with its advanced statistical and data mining techniques to detect patterns and anomalies and generate predictive models that identify claims that warrant further investigation. Part of SOSS’ automated claims fraud detection platform is powered by our Identity Resolution Engine which has the ability to identify similar identities and relevant relationships. Combined, these two solutions help insurance providers to bring a fraudulent claimant in before too much time elapses.
Why is that important? According to the I&T article, it’s because “most fraudulent claims that are defeated are not denied by the insurer, they’re dropped by the insured. Fraudulent claims are more likely to be dropped earlier in the process because the perpetrator has less invested in the outcome.”
The problem is, according to another I&T story, “only 17 percent of insurers currently utilize advanced IT tools to detect fraudulent claims.” Instead, I&T reports that:
- Almost EVERY insurer has a Special Investigations Unit (SIU)
- MANY use basic scoring algorithms to flag claims
- SOME use real-time databases to look for multiple claims.
If time is money and insurance fraud is estimated to cost $80 billion a year why don’t more insurance companies use real-time databases?
Unfortunately, the culture of the insurance industry still greatly relies on the humans manning the claims departments and SIUs to sift through claims and make the final call to launch an investigation.
“It’s like playing six degrees of Kevin Bacon, but in a much larger scale.”
That’s director Dave Porter of UK-based Detica, maker of information intelligence software, in a ITBusiness.ca article about the perils of too much data shielding criminals from detection. Earlier this year, thanks to speed and accuracy, Detica’s modeling and data analytic solution helped bust 74 people in a organized crime insurance fraud ring.
But as Dave notes that with “most banks and insurance companies such a task is done manually with teams of two to 20 personnel looking sifting through daily transactions and deciding which ones could be questionable and then conducting further investigation. The work could take anywhere from two days to several weeks.”
In the 21st Century, two weeks is too long.
Subscribe to this blog