Around the world, nonlife carriers, insurance fraud prevention and detection solutions vary. Some regions rely on shared industry databases, such as ISO ClaimSearch® in the United States, while other countries may have insurers bearing the burden of protecting their customers and capital from suspicious activity.
Insurance fraud has grown as a focus of the industry and regulators in recent years. To combat it, insurers, regulators, and insurance associations are looking to the more established markets, including the United States and the United Kingdom, for ideas and strategies that may be applicable to their specific economic and cultural needs.
There are a number of common issues in these efforts to prevent and detect insurance fraud. Here are five key themes that have emerged:
1. Insurers around the world generally do some analysis of their claims for indicators of suspicious activity. But many insurers scale back their efforts in the name of data privacy and other regulatory restrictions — especially analyses that require data sharing among insurers. Regulators increasingly recognize the importance of containing fraud to protect economic health. They understand how antifraud solutions can be effective within strong regulatory restrictions. Regional claims databases enable insurers to identify more suspicious activity than they would be able to find with only their own data, offering a more robust system based on an industrywide perspective.
2. For less established insurance markets, product development and market penetration tend to garner more attention than fraud detection. But deferring antifraud activity for too long can hinder the health of the market. Simply put: Insurance fraud deterrence is a critical factor in a healthy economy.
3. Communication and collaboration among insurers, regulators, and enforcement groups are crucial. In the United States, for example, the National Insurance Crime Bureau (NICB) has engaged both its member insurance companies and law enforcement agencies to work together in fighting insurance fraud. Further, the NICB has demonstrated the benefits of sharing information with the various parties engaged in this effort as well as educating the public on the importance of preventing insurance fraud.
4. Technology and data analytics are critical, but an insurer needs to apply them in a relevant manner and with an implementable supporting structure. A carrier must train staff, put in place escalation processes to deal with identified suspicious activity, and identify audit trails. The resulting improved productivity in an insurer’s work processes is an added value.
5. The right tools make a difference: Insurers have realized return on investment from the data and analytics tools used to manage claims fraud. Management benefits from the business intelligence these tools provide. Analytics has become increasingly sophisticated in supporting claims handlers and management. Advanced tools help in identifying suspicious activity requiring additional investigation and in more quickly paying claims that have no indicators of suspicious activity. An added bonus is satisfying and retaining your good customers by enhancing their claim experience.
In the United States and Israel, ISO Claims Solutions offers a wide range of products for identifying suspicious claims activity — such as matching claims to public records and third-party data or using visual link analysis for detecting organized fraud. While some of those tools require an insurance association or regulator to coordinate the effort, there are steps you can take right away to use your data more effectively in fighting insurance fraud.
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