For insurers facing increased organized insurance fraud, predictive modeling and text mining will be the primary anti-fraud technology investments anticipated by insurers over the next two years. A survey by the Coalition Against Insurance Fraud (CAIF) polled 74 US insurance executives earlier this year to understand how and to what extent insurers are using anti-fraud technologies.
The report, titled "The State of Insurance Fraud Technology" was sponsored by SAS, a provider of business analytics software and services
CAIF estimates that fraud costs more than $80 billion annually in the U.S., with property & casualty fraud costs likely to exceed $30 billion. Statistics from the National Insurance Crime Bureau (NICB) show a 19 percent increase in questionable claims from 2009 to 2011.
The survey confirms that risk from organized fraud is becoming a massive problem for insurers. Over half of survey respondents benefited most by using anti-fraud technology to uncover complex or organized fraud activities, such as medical provider fraud and personal injury protection/no-fault fraud. About 19 percent of insurers were investing in link analysis technology.
"Anti-fraud technology is maturing rapidly and insurers have come a long way, but the study suggests many insurers have much room to grow," says Dennis Jay, CAIF executive director.
The report notes that "studies suggest at least 75 percent of the information available in an organization is unstructured data and that percentage is likely to increase with the growth of social media." More than one-third of insurers report using social media data within their fraud investigation, a number that is expected to grow.
Among responding organizations, 57 percent indicated higher quality referrals as the primary benefit from an anti-fraud technology solution.
"Technology can't eliminate claims adjuster intuition and a special investigations unit's street expertise, instincts and professional judgment, but it certainly can improve the investigation process," says Stuart Rose, SAS Global Insurance marketing principal.
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