In this business, we are intimately familiar with liars and their fibs and foibles, which are anything but pretty. Presumably registering high on narcissistic personality traits, some of them find a comfortable place in today's culture of oversharing. Moreover, inadequate prosecutorial resources seem to embolden these liars, who, under the perceived impunity of social media, tout exploits as if to taunt insurance carriers and law enforcement agencies alike.

The Coalition's yearly roundup is a testament to scammers' brazen cunning, with their naiveté and recklessness often portrayed in nearly equal measure on Facebook, Twitter, and other social networking sites. To thwart opportunistic fraud and address the proliferation of organized crime rings, P&C insurers must employ an arsenal of investigative techniques. As a growing number of claims managers and SIU directors can attest, multi-layered approaches to fraud tend to produce the most encouraging results, with social media as a key ingredient in investigative success.

Sleuthing Or Snooping?
Social media in claims investigations is certainly not a novel idea, though its application is continually being refined. However, this veritable investigative goldmine—which can provide clues as to a claimant's connections, background, education, and whereabouts—is not without its caveats, including privacy concerns for which there is a growing body of case law.

This is to say nothing of the legions of “John Smiths” (trying Googling him) who cry foul. Again, public relations challenges are anything but foreign to insurers. Even though insurance fraud has become a $30 billion-per-year racket according to the Insurance Information Institute (I.I.I.), the public remains somewhat apathetic, seemingly more concerned with the possible encroachment of personal liberty than fraud's massive drain on the economy, as well as the proverbial pocketbook in the form of higher premiums.

Nevertheless, there is a startling amount of potentially useful information in social media sites, with advanced analytics continually changing the face of claims investigation, as James Ruotolo, principal for insurance fraud solutions at SAS, points out:

“Technologies like text mining, sentiment analysis, content categorization and social network analysis can automate social media research and be integrated into the fraud identification and predictive modeling process,” he says.

Such tools are useful in uncovering complex operations, such as those abusing the Florida and New York personal injury protection (PIP) systems, along with more blatant cases of fraud—as in scammers incriminating themselves by posting pictures of engaging in adventure sports while collecting workers' compensation benefits.

Deceptively Simple
It's important to keep that a claims investigation is rarely as simple as a Facebook user with lax privacy settings and a penchant for recklessness. In another sense, social media serves as a useful, open-source intelligence research tool to identify leads and corroborate information.

Beyond injury claims, such as slip and falls and workers' compensation disputes, technology enabled social media intelligence is enhancing fraud detection across auto, property, liability and other lines of business. Take, for example, the white paper titled, “Combating Insurance Claims Fraud” in which SAS details how its social-network analysis has proven effective in identifying organized fraud activities by modeling relationships between entities in claims.

“Entities may be defined as locations, service providers, telephone numbers, and VINs,” according to the SAS report. “Tools can be tuned to display link frequencies that exceed a programmed threshold. Large volumes of seemingly unrelated claims can be checked, and then patterns and problems identified.”

“For example, social network analysis might show a high-activity account with links from many accounts, or a low-activity account with strong links to a master account,” SAS continues. “It might reveal multiple claims in a short period of time from related parties, such as members of a single family, or the classic ring associated with staged accident scams.”

In Capable Hands
In the fight against fraud, it is important to keep in mind that there is no one magic bullet or given formula for success. All the technology and strategy in the world will not compensate for a deficit in clever, skilled analysts to interpret and effectively procure information—both ethically and in keeping with state-specific rules of discovery.

As Deloitte illustrates in its “Fight Insurance Fraud” report, which the consulting firm released in December 2012, on a fundamental level, the heart of fraud-fighting operations is the SIU and the claims adjuster, who should be working toward the organization's overarching fraud-fighting goal. In the report, Deloitte relays a compelling case study involving a large insurance carrier:

“The SIU function is now central and supported by regional specialists as needed. An element in the company's approach was rebuilding core fraud investigative skills, including hiring former FBI professionals and private investigators. In addition, it separated and distinguished investigative skills from the basic administrative skills required to support the SIU referral, preliminary investigation, and reporting.”

When putting the pieces of the fraud puzzle together, claims investigators must move swiftly and decisively, especially because information posted online has a definite “shelf life” for lack of a better term. Crucial evidence must be discovered before it can be taken down. For example, eBay auctions invariably end. Users remove YouTube videos, vacation photos, and tweets.

Regardless, investigators should not grow accustomed to scammers' naiveté about protecting personal data and covering virtual tracks to yield viable clues. They must instead avail themselves of cutting-edge technologies and some good old-fashioned detective work.

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Pretty Little Liars

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