Anti-fraud Technology Offers Insurers Positive ROI: Survey
Staff Writer | September 23, 2014
Insurer use of anti-fraud technology is rising, more insurers see a positive ROI and they increasingly rely on technology to counter emerging threats such as underwriting scams, money-laundering, and cyberfraud. Yet advanced tools such as predictive analysis and geo-mapping are far from widespread among insurers.
These are among the core findings of a study of how insurers use anti-fraud technology. The survey was 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,” says Stuart Rose, 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,” says Dennis Jay, the coalition’s executive director.
Nearly all insurers (95 percent) report they use anti-fraud technology, compared to 88 percent in 2012. SIUs also appear to be making headway in building a strong internal business case for anti-fraud technology. Only eight percent of insurers said lack of ROI was a challenge to implementing anti-fraud weapons, compared to 36 percent in 2012.
Fraud also 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 report. 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. 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).
Many insurers also appear to face a shortage of claims and anti-fraud professionals despite the rising incidence of insurance crime. Technology can help bolster these often-understaffed teams. In fact 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 concludes. “This strategy will go a long way toward cutting overall losses for an insurer.”
Read the full report whitepaper The State of Insurance Fraud Technology to understand how and to what extent insurers are using anti-fraud technologies.
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