How Insurance Companies Can Address Frauds?

Fraud is among the biggest challenges faced by the insurance industry today. There is an increasing pressure to reduce frauds to help protect both insurers and insured. Here are three things that we need to consider when dealing with insurance frauds:

  • Use an effective claim team: An effective deployment of claim team is an essential part in any fraud management. In this case, we should be able to handle frauds effectively through proper investigative procedure. We need to work with a team with proper investigative skill that can provide more evidences to the table. The team should have well-defined training program and all the necessary resources. The team must be briefed thoroughly about the fraud an,d if possible, they need to work with the police, if the perpetrators are still at large. There should be a seamless cooperation with those involved in any fraud case. We need to have a properly defined strategy to form a team with key skills that can effectively balance workloads.
  • Use proper technology: One of the issues faced by the insurance industry is the frequent use of manual process, due to the limited number of technologies specialized for combating frauds. In this case, many insurance organizations need to work with multiple less than optimal system and this may result in huge maintenance costs. As a result, the need for highly advanced technology to handle frauds can’t be overemphasized. The technology should be properly aligned with the overall business model. More and more people are using the social media websites and it is important for use to consider specific social network analysis. We could integrate various anti-fraud system and social networking platforms can be particularly effective in this area. For insurers that have been affected by frauds, they should integration of IT system with external law enforcement agencies. By using proper systems, it should be easy to automate the decision making process. It could be discovered that different areas with an insurance company don’t communicate well with one another. If it is true, then there’s a need to improve data sharing between different departments, such as finance, claims and underwriting. In this case, it would be easier for the insurers to detect questionable patterns that could indicate frauds and other similar issues. It should be noted that frauds can take different shapes, whether they relate to car, health, life and other types of insurance. In this case, it is important to look across different types of insurance coverage the company is providing, so it would be much easier to combat frauds. It is also essential to learn from old cases of insurance frauds, so insurers could find out whether they are dealing with possible fraud attempts.

In the end, it is important for the insurance company to have a centralized anti-fraud module, where all reports and findings are processed. Fraudsters in the insurance company are getting more sophisticated in their methods and there’s a bigger need for more effective system.