I once asked a colleague who had worked for multiple insurers why some carriers worked hard on fighting fraud through investments in technology and Special Investigative Units, while other insurers chose to do little if anything to combat fraud.

Those that chose not fight fraud looked at this strategy as “the cost of doing business,” he said.

That conversation occurred a little over a decade ago, so many of the technology tools that are used today weren't even available to most insurers at that time, but the idea of doing nothing still struck me as crazy.

Today, we know that investing in technology to fight fraud and the employment of SIUs is the cost of doing business. Insurers no longer concede the battle to the liars and cheaters of the world, which policyholders should appreciate. Insurance premiums are high enough without honest people having to cover a carrier's losses from fraud with higher premiums.

In a survey conducted by the Coalition Against Insurance Fraud and the technology company SAS, the results showed a significant increase in the number of insurers doing at least minimal work to fight fraud with technology.

In an article written by Claims magazine editor Christina Bramlet for our website, coalition executive director Dennis Jay reports on the encouraging results of the study, including the fact that close to 90 percent of the insurers surveyed are at least using basic analytic tools such as automated red flags, claims scoring, and link analysis.

This begs the question, though: What are the other 10 percent from this survey thinking? I'm sure there are small, mutual insurers that don't see fraud as a problem worthy of investment, but that's a dangerous way to proceed since not all their claimants are members of the mutual organization.

The good news for insurers is the technology carriers are employing continues to mature, although not everyone is taking full advantage of what is available.

“Although the study suggests that less than half of the insurers surveyed are employing predictive modeling, text mining, geographic data mapping and other advanced analytics, we must keep in mind that we are in an era of tremendous pressure on funding,” says Jay. “The fact that the majority of survey participants say they plan to either increase investment in these technologies in 2013 or at least maintain current levels of spending is positive news.”

The battle against fraud is not over by a long shot, but at least today's insurance carriers are more vigilant than their predecessors of less than a generation ago. Many carriers were led kicking and screaming into the battle thanks to government regulations, but no matter how they got there let's keep reminding them that honest policyholders appreciate the effort.

Special Reports /

Fighting Fraud: The New Cost of Doing Business

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