Is anti-fraud tech skewed towards claims fraud?

A survey of U.S. insurers identifies the kinds of technologies that the industry is using to help detect insurance fraud. What technologies does your brokerage use?

Insurers are more frequently using technology-based tools to detect insurance fraud, but only a minority are using technology to help identify non-claims functions such as underwriting fraud, a study commissioned by SAS and the U.S.-based Coalition Against Insurance Fraud has found.

The online survey of 74 insurers showed that 88% of respondents said they are currently employing anti-fraud technology, and nearly all said they used it for claims fraud detection and investigation.

The top three anti-fraud technologies used by survey respondents included automated red flags or business rules (64%), scoring capability (60%) and link analysis (57%). In most cases, these tools automate many manual tasks – business rules, for example – associated with fraud detection.

“However, less than half are using technology for application/underwriting fraud or internal fraud,” the report found. This would include detecting fraud through risk assessment and/or point of sale.

Also, insurers are generally not using more sophisticated technologies that are available. Fewer than half of the insurers surveyed, for example, use workflow routing (43%), text mining (40%) predictive modeling (40%) or geographic data mapping (23%).

Insurers indicated they were most likely to invest in predictive modeling (33%) and text mining (31%) over the next 12 to 24 months, the study found.

SAS and the coalition noted that the anti-fraud technology still relies heavily on the quality of the insurer’s data, with the most common sources of data being the carrier’s own claims data (69%) and public records (62%).

Limitations to such data include the fact that information silos are still prevalent in the insurance industry, and many organizations are still using a combination of legacy systems, spreadsheets and internal databases. Partly as a result, many insurers still haven’t been able to fully integrate anti-fraud technology with claims and other systems.

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