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Insurance Fraud

1. Underwriting Prudence

Claims and Fraud management begin much before the Claim incident is reported. There are several indicators that can raise suspicion during the underwriting process. After the Claims are settled, the Claims data can positively impact the underwriting and rating functions. There is a need to incorporate more information into the underwriting decision-making process. The responsible use of data and information during the underwriting analysis is one of the most powerful weapons against Fraud.

The organization should know its prospective customers well to find fraudulent intentions beginning the review of sales proposal. An attempt should be made to dig deeper to verify identity and every application must be individually scrutinized. The goal of reducing Claim leakages should be kept in mind from the very beginning and the Fraud fighting mechanism should be activated from that moment.

2. FNOL Management

From a Fraud perspective, effective management of First Notice of Loss (FNOL) process is crucial for the insurance company. Through improved workflow, streamlining the processes and use of automation, insurers can identify the Fraud triggers and recovery possibilities early in the Claims cycle. The insurers should make use of early warning systems like, Voice Analytics for timely identification of Fraud. There are key factors for example, who reports the Claim (Claimant vs. Attorney Vs. anyone else); the time when the Claim is reported (Immediate vs. Delayed reporting); and the manner in which Claim is reported that can raise suspicion on the genuineness of the loss.

Any delay in identifying the Fraud triggers can have serious consequences later. If the decision to make an SIU appointment is late, the insurers can lose important eyewitness that can affect the Fraud analysis and the recovery possibilities. Any time lost during this stage will cause more than four times efforts, time and cost in the future. To fight the Fraud in an efficient manner, insurers have to be wiser and faster in comparison to Fraudsters. The use Data Analytics to narrow the possible number of Claims to be investigated for Fraud is vital. The insurers can then pay attention to those Claims, where high probability of Fraud exists.

3. Developing an Effective Claims Team

Effective deployment of resources is an important part of the overall Fraud management. Any organization that wants to effectually handle Fraud, must rebuild the Fraud investigative skills and capabilities. It should hire people with solid investigative skills to build a strong SIU unit for Fraud handling. By virtue of their experience, investigators who have worked for the FBI, Police and other investigative agencies can bring more value to the table.

The employees should be equipped with the necessary resources and a well-defined training program should exist. There should be online education and awareness programs through an Online Claims monitor on recent Fraud to the Claim handlers and investigators. Claims people should encourage feedback from the Claimants as a quality improvement tool. There should be a seamless link between Claims personnel and underwriters to make sure the overall business perspective is maintained and followed.