Visualize: Insights that power innovation

Visualize: Insights that power innovation

How a professional’s reputation can expose inflated claims

By Lou Riggio  |  July 11, 2018

How a professional’s reputation can expose inflated claimsTrusting information at face value is a thing of the past. Claims professionals know this well, because they must gather information on a claimant and research prior losses to validate a claim.

But how often do they research the third-party professional on a claim?

Chances are they don’t know as much about that professional as they do the claimant—and what they don’t know can end up costing the carrier.

Excess payments make up 17 percent of auto injury claim payments, according to the Coalition Against Insurance Fraud. Healthcare waste—which includes fraud, inflated prices, and unnecessary services—totals $750 billion in the United States, according to Becker’s Healthcare Spine Review.

What’s the cause of these issues? Often it traces back to an unscrupulous professional who pads claims to increase payments.  

Suspicious activity from professional providers

Fraud perpetrated by service professionals is a common issue in the insurance industry, and it’s showing no signs of slowing down. Last year, federal authorities charged 412 people—including 115 medical professionals—responsible for $1.3 billion in healthcare billing fraud. It was the largest healthcare fraud bust to date.

Sometimes the fraudulent activity is less pronounced and organized. It may be a doctor who submits claims for treatments outside his or her authorized specialty, an auto shop that charges a higher price for common repairs, or a contractor who inflates the cost of materials on invoices.

Though adjusters may not know for sure when they’re being defrauded, they can find some early clues to determine if a professional in the claim is reputable.

A bad reputation is a red flag

The first line of defense against provider fraud is to check an individual’s professional license. Medical providers, attorneys, and most contractors and public adjusters are required to have professional licenses in the state in which they conduct business.

A simple license investigation can raise red flags about a professional on a claim. It can show if the individual has a license, if the license is current or inactive, if the individual has past or present suspensions or sanctions, and if there are any restrictions on the professional’s practice and/or unfavorable details about business affiliations.

Knowing these details can help adjusters, claims managers, and SIUs when handling claims. Spotting an inactive license or unlicensed individual can lead an adjuster or SIU professional to perform additional background checks to uncover other details about the entity.

Finding a history of sanctions and suspensions can aid adjusters in gaining a deeper understanding of those individuals involved in the immediate case before them. This will enable better and faster outcomes, allowing the benefits of these efficiency gains to be redirected to other efforts and improved departmental performance.

Spotting shady professionals early

Researching a professional service provider should be a standard part of evaluating claims. With the amount of fraud occurring, claims professionals must do their due diligence to determine if a claim is legitimate. When you know more about a professional’s reputation, you can make better decisions concerning claims.

Provider fraud directly affects insurance loss ratios, which have risen industrywide three of the past four years. Detecting inflated claims early by discovering dishonest professionals saves insurers from overpayments and benefits their bottom line.


Lou Riggio is director of product innovation for Decision Net at Verisk. You can contact him at Louis.Riggio@verisk.com.