Many people take advantage of their insurance claims and submit deceitful claims. This has been a problem for a long time as over $60 billion or more is paid for fraudulent insurance claims. Due to this, many insurance companies are now hiring investigators to look into the insurance claims made. Insurance fraud investigation is able to identify claims that are seeking compensation based on inflated or wrongful claims. Insurance companies have become work vigilant with their claims that you may even need a lawyer to help you out with an application.
Insurance companies are taking this seriously because it is a financial loss for them. They want to ensure claims are legitimate and that no one is taking advantage of the system. With an investigation system in place, insurance companies can operate efficiently. Here are the techniques they use to determine whether a claim is fraudulent.
Of course, when investigators are on the job, they take into account the privacy protection, Personal Data Act and other legal implications before applying any investigation techniques. These following eight insurance fraud investigation techniques have been successful in identifying fraudsters:
1. Data analysis
According to a PWC study conducted in 2016, about 7200 companies surveyed experienced some type of fraudulent claims. Data analysis may be a time-consuming investigation process, but it is a successful technique as it investigates different domains of information including financial, economics and law. This has supported internal control systems that were lacking in fraud detection.
The data analysis offers validation of claims as well. Investigators are able to acquire a lot of useful information and document it that further helps with pre-trial investigations and enforcement of the law.
2. Investigation against criteria
Claims are basically evaluated against a number of criteria which includes the insured claims history and the length of time the insurer has been a customer with the insurance company.
Investigators will ensure that if it is a medical claim, they will carry out their independent medical examination where a doctor selected by the insurer examines the medical condition. Another method within this technique is an audit that has specialists identifying any unusual factors with the claims.
3. Interview policyholders
One of the best insurance fraud investigation techniques is to interview the policyholders. Investigators are trained to detect wrongful actions, motives and intent. Claims appear legitimate for insurance companies, but investigators can immediately learn that the claim is actually fraudulent. They have a set of fraud investigation questions that put the claimant on the spot. Interviews are recorded with permission and the interviewee always has the right to access the information that has been discussed at the interview.
4. Inspect the event
This is one of the best insurance fraud investigation techniques. Inspecting and investigating an incident that has led to the claim, can provide many clues. If an insurance policy was taken just recently and soon after an event occurs, this is the type of situation that needs thorough investigations. Investigators make sure to have approvals and always take into account any legislation that governs studies that go beyond just investigating a claim.
5. Advanced analytics
This technique uses high-level methods and tools to look into the future and to analyze trends. It uses business intelligence for deeper insights and accurate predictions. Analytics at this level can give insurance companies greater insight into their data that they would typically just store or archive.
In the past, investigators had to rely on facts and a large amount of intuition. With analytic data methods in place, investigators can help insurance companies immediately see the red flags.
6. Rule-based testing
This method is used to test the transaction against a predefined set of algorithms or rules. It results in aggregate scores that detect any fraudulent patterns with a suspicious claim. It offers accuracy in results, that insurance companies can quickly prevent any financial losses with a fraudulent claim. Predefined rules help to calculate an aggregate score. Any claims that exceed a threshold value are treated as suspicious and investigated further.
7. Fraud detection and investigation software
There is sophisticated software that can provide a solution for detecting, preventing and managing fraudulent claims. They can even alert insurance companies of a case. Investigators have the best software in-house to identify suspicious activities, uncover hidden connections and detect patterns within the claim process. The software offers a visualization that will provide a better understanding of the fraud threat and can prevent substantial losses as early as possible.
8. Data mining
Using large databases, this technique can detect fraud in any insurance claim data. It takes all past insurance claims into account. Data mining uses audited results that study historical records and identifies probable fraudulent claims not just in the moment, but also in the future.
Investigators have these systems in place to support insurance companies. This system enables the investigator to predict which insurance is likely to be fraudulent. This technique has proven to offer great aid in fraud detection.
