Urgent reasons to foster insurer data visibility

Fraud costs insurance companies around $40 billion per year, according to the FBI.

Just as today’s fraudsters are using the latest technology to carry out their scams, so too should insurance companies turn to tech solutions to battle and even prevent fraud.

Specifically, insurers should implement data visibility, which can empower them to fight and prevent insurance fraud and ultimately improve their bottom line.

What Is data visibility?

Data visibility is a state in which an organization can access, visualize and use all of its data. Further, this data is stored in a single location, also known as a “single source of truth,” so that anyone from any part of the organization can go to that location to get any information necessary to do their job.

To make this happen, data needs to exist in a standardized format, and the organization has to have a plan in place for standardizing all future data it acquires so that it, too, is accessible, searchable and visible.

With data visibility in place, it’s possible to use predictive analytics to inform fraud detection and prevention efforts. In other words, it’s possible to use all the information an organization has about past fraud incidents to better predict and resolve future ones.

Boosting fraud detection

Most experienced claims professionals are good at spotting potentially fraudulent claims. They know what to look for and when to raise a red flag. But even the most experienced professional only has their own experience to tap into when assessing claims.

Predictive analytics maximizes every data point available to an insurance organization from every past claim filed and any other data sources it has access to. A fraud detection algorithm powered by that data could, for example, signify with extremely high certainty whether a claim is fraudulent or not.

Once this is determined, claims professionals can focus on settling legitimate claims or investigating likely fraudulent ones. By automating the fraud detection function, the insurance provider can both service legitimate claims and identify fraudulent ones faster.

The algorithm can also signal “gray area” claims that require additional human analysis.

This, too, saves time, as it reserves a team’s valuable resources for questions that need the critical thinking that only a human can provide.

Preventing fraud

In addition to identifying fraud when it happens, data visibility empowers an insurance organization to prevent fraud.

To illustrate how, picture a real-time dashboard, which offers visual representations of various aspects of an organization’s performance. Real-time dashboards are incredibly powerful and can only exist when an organization’s data is structured and ordered correctly — i.e. when it’s made visible.

An organization could, for example, create a dashboard of fraudulent claims by line of business. This dashboard wouldn’t require any new data, but it would offer a new way of presenting, or visualizing, existing data.

In this visual format, maybe it becomes clear that one line of business has significantly more fraudulent claims than any other line.

It’s still a small percentage overall, so it’s not something analysts would have noticed without the visual representation. But let’s say about 9.8% of most claims are fraudulent 11.2% of claims are in one line of business. That’s a 14 % higher fraud rate, which is certainly worth investigating.

Maybe that investigation leads to the organization tweaking its underwriting guidelines or updating the language of a few questions in its online application.

The goal, of course, is to reduce the rate of fraudulent claims in that line of business. But even if these solutions don’t work, the organization can continue to identify such problems, thanks to data visibility. And organizations can go even further by theorizing solutions, testing those solutions, and iterating as needed.

Additional benefits of data visibility

While the financial benefits of fraud detection and prevention are enough to justify investing in data visibility, they are far from the only benefits insurance organizations will enjoy.

Data visibility makes it easier to spot trends in sales and marketing, service customers more efficiently, cross-sell and upsell more effectively, and share insights across different parts of the organization.

What’s more, any organization can benefit by implementing data visibility, but legacy organizations stand to gain the most. They have the most data — and therefore the greatest number of insights — waiting to be unlocked and used.

Thanneermalai Krishnappan (thanneer.malai@saggezza.com) is a senior technical program manager at Saggezza (an infostretch company). This firm is a global technology consultant and solutions provider that combines software development, implementation expertise, and data analytics to help businesses make better data-driven decisions and improve client interaction, engagement, satisfaction, revenue and profitability.

Also by this contributor: 5 ways to eliminate insurance company communication gaps