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Fraud Screening: The Hunt for Suspicious Data


Information Management Online, November 6, 2009

Bill Kenealy

Fraud detection is basic to insurance operations, and never more so than during a down economy. In addition to ongoing efforts to ferret out organized fraud rings, carriers need to be on the lookout for increased instances of soft fraud, as debt-ridden and desperate consumers pad otherwise legitimate claims.

Since the upswing in fraud slices through all personal and commercial lines business, including P&C, workers' comp and health, carriers are more diligent than ever in their efforts to thwart the bad guys.

Fortunately, they now have a bevy of technological options, including predictive analytics and visual link analysis, to add to their traditional array of fraud detection tools. Read on to see how carriers are melding state-of-the-art with time-tested investigative techniques to separate fraudulent claims from legitimate ones, and improve their bottom lines.

In addition to the usual witches' brew of hard fraud, soft fraud, staged accidents and slip-and-fall fraud rings, insurance carriers must contend with increasing instances of fraud borne of a policyholder's adverse financial circumstances. The homeowner or SUV owner seeking to get out from under a loan with a little help from a can of kerosene is far from apocryphal. "Fraud has historically been committed out of acts of greed," says David Rioux, VP of corporate security and the special investigative unit (SIU) for Erie, Pa.-based Erie Insurance. "Now, given the economic situation we're in, fraud is being committed out of acts of desperation."


While the totality of insurance fraud is likely unknowable, new data from the Des Plaines, Ill.-based National Insurance Crime Bureau (NICB) offers one way of quantifying the problem. NICB data encompasses property/casualty, commercial and vehicle data, but the most pronounced surge occurred in auto claims, as suspicious car fires were up 20% from last year, suspicious auto glass claims up 76% and "phantom" accidents were up 46%.

Read more.

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