What are your fraud prevention and detection investment priorities? Are you keeping up to date? Always important questions, of course, they now come in the context of increased suspicious claims activity (according to the National Insurance Crime Bureau), greater organized fraud sophistication, and a wave of emerging technologies that can help special investigations units (SIU) across the country.
According Insurance Networking News, citing a recent Aite Group study, claims fraud is rising rapidly, and property/casualty insurers are setting their priorities to address the challenge. The key findings of the study — in which ISO Claims Solutions participated — include:
1. Increasing investment. Property/casualty insurers are set to increase their commitment to fraud detection and prevention, with 44 percent growth in spending forecast from 2011 to 2016. Aite Group expects claims fraud analytics and scoring investments to increase $20 million a year, on average, with carriers investing $270 million in 2012. By 2016, the total could reach $360 million. The report also indicates spending will divide roughly evenly between analytics and claim scoring.
2. Rising fraud costs. The investment will be necessary, it seems, given the trend in insured fraud losses. Aite Group estimates fraud cost the property/casualty industry $64 billion last year, with homeowners multiperil accounting for $14 billion (22 percent) and $26 billion (40 percent) coming from private passenger auto.
3. Speed to detection. Already well known to SIU teams, speed has become something of a guiding star for the industry. The report notes the industry is “beginning to focus [its] fraud management strategies and investments on solutions that enable fraud detection as early in the claims process as possible.” Ideally, that would come before claims departments make payments and lose investigative opportunities.
4. Key priorities. The research process identified several important areas of antifraud investment for the property/casualty industry, including visual link and social network analysis, case management, and analytics and predictive modeling.