According to Deloitte, fraud is a major issue for the insurance industry; it’s that an estimated $80 billion-a-year is lost in frauds. An estimated 3 to 5 percent of every claim dollar is lost to hard fraud, while 5 to 25 percent of every claim dollar is lost to soft fraud.
In US, 43 states have regulatory actions against fraud. The companies must have anti-fraud plans, Anti-fraud bureau, and investigative units. There are around 30 Anti-fraud bills that have been enacted by states including Michigan.
State legislatures across the country are continuing to strengthen anti-fraud laws, and insurance companies would fair best to review what’s in motion per state and how each might impact their business.
A Coalition against Insurance Fraud study has found companies to be embracing new and innovative technologies to combat fraud as well. Others have implemented the following analytics techniques to the mix:
- Data exploration: Identifying trends, outliers, and circumstantial anomalies through exploratory data analysis.
- Geospatial analysis: Using geographic coordinates to identify spatial patterns and anomalies.
- Social networking: Visualizing and analyzing relationships to identify key players and uncover hidden patterns.
- Machine learning: Leveraging advanced modelling techniques such as neural networks, random forests, and regression to uncover subtle fraud patterns