Insurance fraud is one of the main problems that insurers face all over the world. Despite the fact that there is a pricing pressure due to the slow economic situation, reducing claims payments is one of the best ways to increase efficiency and reduce costs. From a strategic perspective, the overall success of operators largely depends on how they relate to their function of Claims; for many insurers. The efficiency of processing applications is often their unique selling proposition. Reducing Claim Leaks by Effectively Dealing with Insurance Insurance Fraud and increased attention to recovery management can help insurers reduce the cost of claims.
This article is an attempt to highlight five key areas that should be considered when developing an effective fraud management strategy.
1. Underwriting Prudence
Claims and fraud management began long before the incident was reported. There are several indicators that may cause suspicion in the writing process. Once claims are settled, Claims data can have a positive effect on the underwriting and valuation functions. More information needs to be included in the underwriting decision making process. Responsible use of data and information during underwriting analysis is one of the most powerful weapons against fraud.
The organization should be well aware of its potential customers in order to find fraudulent intentions when starting a sales proposal review. An attempt should be made to dig deeper to verify identity, and each application must be individually verified. The goal of reducing reported leaks should be remembered from the very beginning, and from that point on, a mechanism to combat fraud should be activated.
2. FNOL Management
From a fraud point of view, effective management of the First Notice of Loss (FNOL) process is crucial for an insurance company. Thanks to improved workflow, streamlined processes and the use of automation, insurers can identify fraud triggers and recovery options at the beginning of the application cycle. Insurers should use early warning systems such as Voice Analytics to identify frauds in a timely manner. For example, there are key factors that report a Claim (the applicant against the prosecutor against anyone else); claim filing time (immediate or deferred reporting); and a method of reporting a claim that may cause a suspicion of authenticity of the loss.
Any delay in defining fraud triggers can have serious consequences later. If the decision to appoint a SIU is delayed, insurers may lose an important witness who may affect fraud analysis and recovery options. Any time lost in this phase will result in more than fourfold effort, time, and cost in the future. To effectively deal with fraud, insurers must be wiser and faster than scammers. Using Data Analytics to narrow down the possible number of claims to be investigated for fraud is vital. Insurers can then pay attention to these claims, where there is a high probability of fraud.
3. Develop an effective claim group
Efficient deployment of resources is an important part of overall fraud management. Any organization that wants to efficiently handle Fraud needs to realign the skills and possibilities of investigating fraud. He must hire people with strong investigative skills to create a strong SIU fraud processing unit. By virtue of their experience, investigators working in the FBI, the police, and other investigative agencies can bring more value to the table.
Employees must be equipped with the necessary resources, and there must be a well-defined training program. There should be educational and outreach programs through a monitor of online claims of recent fraud with claim handlers and investigators. Claims against people should encourage feedback from applicants as a tool for quality improvement. There must be a seamless relationship between claims staff and underwriters to ensure that the overall business perspective is maintained and respected.
The aging baby boomers and the lack of qualified resources lead to a large dependence on automation and IT investment. Management must have a well-defined strategy for retaining employees with key skills through workload and balancing work. The goal of preventing leakage of claims and restoring the skills and capabilities of an investigation cannot be accomplished without the organization having a well thought out and promising re-search strategy.
4. Use of technology
One of the challenges facing claims review organizations these days is the increasing use of manual processes with limited use of tools and technology to manage processes. It is often found that the Claims Division in an insurance organization is one of the departments that work with less optimal systems with huge maintenance costs. It is impossible to overestimate the need to use advanced technologies and analytics in the processing of fraud. Insurers should develop an integrated fraud program with a comprehensive overview of the life cycle of the policy, which clearly defines the objectives of fraud management that fit the business model.
As the number of people using social networking sites is growing every day, insurers should even consider analyzing social networking sites. Integrating claims systems with social networking sites can be an effective fraud detection tool. For insurers where fraud leaks are on the higher side, it may even consider integrating IT systems with external law enforcement agencies. like the FBI, Interpol and DMV. Automating business-based decision making can also help streamline and standardize the claims process.
5. Exchange of information
It is often found that different functional areas in an insurance organization do not speak well with each other. Thus, there is a great need to strengthen the exchange of data between various departments, in particular, underwriting, claims and finance. There may be similar patterns and problems with fraud in other areas of business, such as Workers & Comp, Commercial Auto and Crime. Access to viewing different types of coverage for normal behavior will be critical to success in combating fraud. In addition, companies must work together to maintain fraud databases in order to have all the information in one place. This can help analyze fraudulent claims versus old fraudsters and broaden institutional knowledge and fraud management capabilities.
There should be a centralized fraud module, where the findings and reports from the processors and investigators of the application are documented and available for viewing at any time. When fraudsters are becoming more sophisticated in their approach, there is a great need to expand industry cooperation and exchange best practices among insurers in the fight against fraud.
