Modern Anti-fraud Technology Remains Lower Priority
Robert Regis Hyle | November 18, 2014
In case you didn’t realize it, this is International Fraud Awareness Week, so it seems like a good time to point out that estimates of fraud are no longer in the billions of dollars—they’ve reached the trillion dollar level.
How did we get this far? Too many people—including the people who run insurance companies—ignored the problem for far too long and somehow insurance fraud managed to gain a reputation as a victimless crime. Once the stampede began it was impossible to stop.
We are all victims, though, and we pay for it in increased premiums every day because, as we have learned far too often, it’s always the little guy—in this case the consumer of insurance products—that pays for the crimes.
At least insurers are paying more attention to what is happening around them, something that couldn’t be said 10 or 15 years ago. The bad news, though, is that not enough insurers consider it a serious enough problem to devote the time and resources needed to protect their company’s assets, and the premiums paid by their policyholders.
What is bothersome is that with all the advances in technology over the last few years, insurers are not taking advantage of what is available to them.
“The technology is definitely getting better, but there are still around 50 percent of insurers using very basic technology,” says Dennis Jay, executive director of the Coalition Against Insurance Fraud. “The percentage of insurers using anti-fraud technology has increased since our last survey in 2012. They just aren’t using cutting-edge tools.”
There is plenty of blame to throw around. One problem is the internal battle insurers face over resources. Look at your top five areas of technology concern within your business. Fighting fraud may be on the list, but who is fighting for those resources and who do you believe is going to win a debate between the VP of Underwriting and the head of the Special Investigation Unit?
Jay is hopeful about the future, though.
“P&C insurers are in better financial shape today and are loosening the purse strings so we see more SIUs expanding and some companies starting bigger and better units than they had before,” he says. “There always is going to be a problem with some segments of the industry, but overall it is getting better.”
Fraud awareness week seems like a good time to take an internal look at how fraud is affecting claims payments and profits. No one is going to like what they see, but let’s hope they are willing to do something about it.
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