The insurance market is a huge business that collects premiums of more than $1 trillion annually, providing fraudsters with immense opportunities to commit fraud.
Over the last few years, fraudulent claims have steadily grown, costing both companies and their customers more than $40 billion a year, and that’s excluding medical insurance fraud, FBI estimates.
The perpetrators carrying out these criminal acts constantly change their strategies. Fraudulent medical claims, staged accidents and even fake companies are all means for criminals to scam the industry. As a result, detecting issues is becoming increasingly challenging.
There are not enough investigators to put a significant dent in insurance frauds. Hence, companies are turning towards machines to help deal with basic scams, thereby freeing up agents for more complicated aspects for investigations.
It’s time; insurers need to deploy an analytics-driven, proactive approach to combat and stop fraud. By leveraging augmented intelligence, insurers can detect and identify past threats preventing fraud attempts in real time. New technologies like artificial intelligence (AI) can help agents keep one step ahead of perpetrators. Moreover, insurers can also adapt to changing business rules and emerging nefarious activities.
We have listed four reasons insurers need to address insurance fraud with sophisticated AI systems and machine learning.
1. Digital Transformation
As the industry is going digital, claims reporting has become easier. Now more people than ever are reporting claims electronically, but the claims staffing team remain constant. This means higher claims volume, but limited workers, resulting in the need for AI systems.
2. Evolving Fraud Tactics
The claim settlement team have looked at insurance frauds the same way for years. However, the environment surrounding claims is always changing, which means fraud detection tactics that were considered new a few months ago might not work today.
3. Combating fraud is not the claim handlers’ job
The work of a claim settlement team includes judging a claim, get it settled and make the customer happy. Finding fraud puts the claim adjuster in an adversarial situation. Hence, there is a need for a system that detects fraud and helps adjusters to focus on other areas.
Claims adjusters have always relied on their experience to identify potentially fraudulent claims. But since perpetrators are turning to technology to commit frauds, insurance agents need to adopt technology to help fight them. It’s time insurance companies should follow a collaborative human-machine approach, then only they can successfully fight fraud.