Graham Newman, European Product Marketing Manager, FINEOS
The final session of day one of the FINEOS Claims Global Summit in the business stream was my own session on fraud. I wanted to explore the extent of the problem and the cost it makes on the industry and on the customers. Depending on the line of business fraud can be implicated in as much as 10% of all claims, often more. Many companies still see this as a cost of doing business, almost as just another expense. But fraud has been rising – up 5% in the UK from 2010 to 2011 and by an even more impressive 7% in America. The question needs to posed: “Is this and acceptable cost of sale?”.
Fraud can be difficult to tackle, for many reasons, siloed data being one of the main ones. This makes it difficult to make connections. You will be unable to assemble a complete view of a customer, account history or transaction path. How can such a company identify separate entities that are operating in collusion, or identify patterns that would only be suspicious when viewed from a broader perspective?
Also, there is a feeling amongst some that it is too expensive to really tackle it. There is a reluctance to stall claims processing in the light of customer service and the possibility of making a mistake and damaging brand reputation.
“Are there solutions at hand?” And . . . “Should I bother with them?”.
In a recent survey in America that revealed that over 12% of those surveyed thought it was OK to exaggerate a claims or claims for injuries that did not happen also showed that 98% of those Americans in that survey said, “It is important for insurers to investigate fraud”.
So, that’s alright then. Actually, it’s very encouraging. A hint of “Show me that it’s wrong – that you take it seriously, and I’ll stop thinking it’s OK to get away with it”.
There are many sophisticated and complex solutions out there for dealing with frauds but there is no one, bullet-proof, cast-iron, any-other-cliché fraud detection technique. Multiple techniques, working together, give the best chance of detecting and defeating fraudulent claims.
However the first line of defence, the most important part of the infrastructure is the enterprise claims management system. The newly developed FINEOS Claims fraud solution can cover a majority of fraud by type and a higher percentage by volume and value.
With the FINEOS fraud detection claims departments can start dealing with fraud at the point of entry, and deal with it in real time. It allows the insurer to apply multiple configurable fraud rules that are dynamically run at every touch point and apply a fraud score to Red Flag a case.
The processing of the rules is therefore automated, configurable, controllable, and improvable.
More on the Claims Summit tomorrow…