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Is Fraud Costing You Customers?

Claims fraud costs the industry billions of dollars a year, but fighting scams aggressively can alienate honest claimants — people who, when inconvenienced, may not appreciate even your best efforts to protect them. And claimants talk about their experiences — let’s not lose sight of how loud a consumer’s voice can be in the age of social media. As a result, fighting fraud zealously can jeopardize future premium. So, many insurers have been cautious with their investigative efforts.

If you can strike the right balance, you can build in a bit of elbow room to incur some losses from fraudulent claims. However, doing business is not that simple. The market has become more competitive. In addition to the perennial fight for new customers, insurers have had to struggle for more than five years with a volatile financial environment. As a result, claim-handling discipline has become more important than ever, since insurers have begun to see fraud detection as a key factor in protecting their combined ratios.

Consequently, friction can grow between the preservation of customer relationships that drive premium revenue and the active investigation of suspicious claims that offset losses. Successfully managing those priorities delivers exactly what you’re looking for — a formula for ongoing profitable growth.

For the claims department, the key is to develop investigative techniques that minimize upsetting a claimant. Claim scoring, third-party data review, and early-warning indicators provide claims adjusters the opportunity to minimize false positives when referring cases to special investigations units (SIUs). That reduces not only the risk that insurers will delay payment on legitimate claims — but that they may inconvenience honest claimants. By cutting initial evaluation time to minutes, claims departments also shorten cycle time, use their resources more effectively, and reduce overhead.

If you use disparate data sets, you have room for improvement. Consulting a number of data sources when reviewing a claim can add time — not to mention errors. An integrated claim evaluation environment, on the other hand, shortens cycle time. It delivers a full view of a claim — including the claimant’s history and the history of any service providers, such as attorneys and doctors — at first notice of loss (FNOL). That enables swifter, savvier decision making.

The result: fewer false positives, fewer inconvenienced honest claimants, and more action against the suspicious claims that warrant an SIU’s time.

The full ISO ClaimSearch® environment helps claims departments integrate all the data that adjusters need to facilitate investigations while minimizing inconvenience to honest claimants. ISO offers tools for claim scoring (ClaimDirector), third-party data (Decision Net), and near-real-time red flags (ISO ClaimAlert: Foreclosure), with more to come to help inform the FNOL rep immediately. With ISO ClaimSearch, which as of March 31, 2013, holds more than 860 million claims, we provide claims departments with the only tools truly integrated with the property/casualty industry’s “all claims” database.

Thomas Mulvey

Thomas Mulvey has been in the business of insurance investigations for more than 27 years. In his current position, he serves ISO as assistant vice president of SIU and claim services. He is also the coordinator of ISO’s Insurance Fraud Management Conference.

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