How technology fights fraud after catastrophes
The insurance industry continues to see an uptick in the number of players bringing new innovations to fight fraud.
Insurance fraud continues to be a major problem for the insurance industry. In fact, the Federal Bureau of Investigation (FBI) estimates the total cost of insurance fraud in the United States is more than $40 billion per year. According to a recent study, two-thirds of insurers agree there has been an increase in fraud over the past three years.
Following any major disaster, scammers swoop in to take advantage of homeowners by promising a quick fix. Sometimes, it’s the homeowner who attempts to scam the insurance company. Regardless, it’s a problem and the industry must continue developing innovative crime-fighting solutions for fraud.
More frequent billion-dollar weather catastrophes have created additional opportunities for insurance fraud. For example, a fraud task force set-up in the wake of Hurricane Katrina, now known as the National Center for Disaster Fraud (NCDF), received and screened more than 26,000 fraud complaints and referred more than 17,000 of those to law enforcement for investigation after the storm.
Technological advances have improved in recent years, providing insurers with critical tools to improve fraud detection and expedite fraud investigations.
The changing tech landscape
While technology has always played a role in the investigation of fraudulent claims, the landscape has changed significantly, and the development and adoption of new technologies has grown. Data analytics is a key part of a carrier’s business and serves as the foundation for the integration of modern technologies, such as predictive analytics, machine learning and artificial intelligence across the industry.
Although technology cannot replace the need for human oversight in fraud investigations, these changes affect how insurance carriers structure their special investigative units. Analysts are included or even set-up as independent fraud-fighting units. Triage units formed within some carriers address the high volume of claims due to better fraud detection.
The National Insurance Crime Bureau (NICB) is constantly looking for innovative ways to help members advance technology practices. In 2017, it recognized the growing challenges associated with disaster fraud for its insurer members and spearheaded the development of the Geospatial Intelligence Center (GIC). The GIC brings together the insurance industry and leverages aerial imagery, Geographic Information System (GIS) data and analytics to reduce fraud and expedite the claims process in the wake of disasters.
After a disaster hits, the GIC leverages remote sensing technology to conduct the fastest and largest aerial data collection via aircraft. Within 24 hours of capture, the data is published to the cloud, providing insurers with the highest quality imagery available — 10 to 15 times better than satellite imagery. Member insurers, government agencies and first responders can immediately view damaged properties, allowing them to expedite claims, often without leaving their desks. This has proven crucial in the fight against fraud as it enables fast, cloud-based access through a comparative analysis of pre- and post-disaster imagery.
The future of technology
The insurance industry continues to see an uptick in the number of players bringing new innovations to market to meet ever-evolving challenges in fraud management. While the latest advancements in cloud computing, artificial intelligence and machine learning technologies have become incredibly proficient in detecting and deterring fraud, the industry will also begin to see new technologies infuse the effectiveness and efficiency of other aspects of fraud investigations. By coming together as an industry to leverage technology via organizations like NICB and the GIC, the industry will continue to make lasting changes — positively impacting our policyholders’ lives.
Jim Schweitzer (jschweitzer@nicb.org) is senior vice president and chief operating officer of the National Insurance Crime Bureau. He is responsible for managing and directing the NICB’s investigative workforce of 190 investigators throughout the U.S. and is the co-founder of the Geospatial Intelligence Center.
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