Insurance fraud growing, analytics primed for fight, study shows
Predictive modeling, text mining most popular anti-fraud weapons, says survey from Coalition Against Insurance Fraud and SAS
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. So finds a survey by the Coalition Against Insurance Fraud (CAIF), which polled 74 US insurance executives in May 2012 to understand how and to what extent insurers are using anti-fraud technologies. "The State of Insurance Fraud Technology" was sponsored by SAS, the leader in business analytics software and services
CAIF estimates that fraud costs more than $80 billion annually in the US, with property and casualty fraud costs likely exceeding $30 billion. Statistics from the National Insurance Crime Bureau (NICB) showed a 19 percent increase in questionable claims from 2009 to 2011.
The survey confirms that risk from organized fraud is quickly 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," said Dennis Jay, CAIF Executive Director.
The report noted 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 reported already 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 an special investigations unit's street expertise, instincts and professional judgment. But it certainly can improve the investigation process," said Stuart Rose, SAS Global Insurance Marketing Principal.
The Coalition is a national alliance of insurance companies, government agencies and consumer groups dedicated to combating all forms of insurance fraud through legislative advocacy, consumer education and research. Founded in 1993, the Coalition is headquartered in Washington, D.C. For more information, visit www.InsuranceFraud.org.
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions, SAS helps customers at more than 70,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW®.