Insurer use of anti-fraud technology is rising, more insurers see a positive return on investment (“ROI”), and they increasingly rely on technology to counter emerging threats such as underwriting scams, money laundering, and cyberfraud, according to a study of insurer use of anti-fraud technology conducted by the Coalition Against Insurance Fraud, with assistance by the business analytics company, SAS.
“Insurers are investing in different technologies to combat fraud, but a common component to all these solutions is data,” said Stuart Rose, the global insurance marketing principal at SAS. “The ability to aggregate and easily visualize data is essential to identify specific fraud patterns.”
“Technology is playing a larger and more trusted role with insurers in countering growing fraud threats. Software tools provide the efficiency insurers need to thwart more scams and impose downward pressure on premiums for policyholders,” said Dennis Jay, the Coalition's executive director.
Nearly all insurers (95 percent) said they use anti-fraud technology, compared to 88 percent in 2012, the study found.
The study also showed that fraud appears to be spreading, thus bolstering the business need for fortified tech solutions.
Suspicious activity rose over the last three years, more than half of insurers said. Increased schemes also flowed through the entire claims cycle. Insurers, for example, saw more attempted fraud in applications and renewals – the so-called point of sale. This is especially prevalent with buying of online coverage.
Insurer deployment of advanced tools could help stem the rise seen in fraudulent activity, the study showed. While most insurers (81 percent) use basic tools such as automated red flags/business rules, far fewer employ more-advanced technology such as link analysis (50 percent), predictive modeling (43 percent), and text mining (43 percent).
According to the Coalition, many insurers also appear to face a shortage of claims and anti-fraud professionals despite rising incidence of insurance crime. Technology can help bolster these often-understaffed teams. The study showed the top two benefits of anti-fraud technology insurers cited were more referrals (59 percent) and higher-quality ones (69 percent). Improved investigator efficiency also was a crucial benefit (41 percent).
“An anti-fraud strategy that includes the right mix of tools and technologies will result in a much higher fraud-detection rate,” the study concluded. “This strategy will go a long way toward cutting overall losses for an insurer.”
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].