Claims departments face many significant challenges every day: the increasing sophistication of organized fraud rings, the temptation to commit soft fraud in the wake of a major catastrophe, and the fact that many consumers don’t have a negative view of insurance fraud. One of the most interesting challenges, though, is the prevailing state of the economy.
That shouldn’t come as much of a surprise. Conventional wisdom holds that claims — and claim fraud — increase during periods of economic difficulty. Financial strain takes its toll on policyholders. The increase in claims (for example, workers' comp as a result of staff shortages and attendant declines in workplace safety) makes opportunistic fraud a greater threat, simply because more opportunities arise.
While the market has clawed its way back from the depths it reached toward the end of 2008, the recovery has been delicate (at best), and volatility has made many of us apprehensive. Waiting for the economy to improve has its limitations as a strategy for mitigating insurance fraud, and it may take a while for cloudy skies to clear. That fact only increases the benefit of investing in insurance fraud prevention and detection now. Also, technology with short implementation times can deliver accelerated benefits.
The ISO ClaimSearch® suite of products, including modules for claim scoring, case management, and third-party data, requires relatively little implementation time compared with other antifraud software, and existing technology supports fast integration with other claim systems.
Instead of waiting for an economic recovery to reduce fraud, carriers can take action now. In addition to providing near-term benefits while the future remains uncertain, a robust fraud detection system never goes out of style. After all — hard and soft fraud continues, even when the market’s arrows point upward.