FICO Solution to Combat Insurance Claims Fraud

FICO, a provider of analytics and decision management technology, announces the availability of a new solution aimed at helping insurers curb insurance claims fraud. The FICO Claims Fraud Solution uses three integrated technologies to identify fraudulent insurance claims faster, in order to help insurers cut general insurance fraud losses that last year reached an estimated $52 billion worldwide, according to research and advisory firm Celent.

Challenging economic conditions have pushed many kinds of insurance fraud, such as auto claims fraud, to new highs in markets worldwide. In theU.S., insurance fraud accounts for an estimated 10 to 20 percent of insurance premiums; that number climbs as high as 25 to 30 percent in other markets, such asBrazil.

A single scheme uncovered by the FBI in February 2012 racked up an estimated $279 million in losses.

The FICO Claims Fraud solution provides an integrated set of three fraud fighting technologies to catch more fraud. Predictive models based on neural networks, modeled after the human brain, identify potential fraud either at the point of sale or at first notice of loss, so that insurers can catch fraud before the claim is paid. The results are prioritized so that investigation actions are more efficient, focusing on those claims most likely to be fraud.

Fraud investigators can use FICO's business rules management system, to identify suspicious claims that match known fraud schemes. With the solution's link analysis capabilities, fraud investigators can scour claims data to find previously undetected fraud based on connections to confirmed fraud cases found by the business rules or FICO analytics. This technique is useful for uncovering fraud rings, such as "cash for crash" auto fraud schemes where criminals cause collisions with innocent drivers in order to file fraudulent whiplash and other claims. FICO estimates the combination of predictive analytics, link analysis, and business rules finds up to 50 percent more fraud over a rules-based system alone.

"Personal lines and commercial lines claims deserve the same vigilance that insurers are already applying to healthcare insurance fraud, waste, and abuse," says Russ Schreiber, vice president and insurance practice leader at FICO. "FICO has been the leader in analytics-based fraud detection over the last 20 years, and we're applying our advanced analytic approach to give personal lines insurers the most powerful protection on the market."