The Wide World of Claims Fraud (And How to Come Out On Top)
Claims fraud: It’s not just for insurance companies anymore. These days a variety of businesses deal regularly with claims that present the opportunity for fraud, ranging from false health care and other benefits claims to dishonest rebate and warranty claims. The good news is that qualified fraud experts can help all types of companies come out on top.
Four Hurdles to Clear
Technological advances over the last decade or so have given rise to the emergence of applying predictive analytics to existing data sets — creating a powerful tool for combating fraud when in the right hands. To make the most of such analytics, companies need to take a strategic and integrated approach:
1. Engage in strategic planning. The use of analytics without the guidance of a strategy will lead to wasteful, redundant and haphazard efforts. A fraud expert can help a company vulnerable to claims fraud develop an appropriate strategy to direct its data and predictive analytics, including identification of goals and the requisite resources. Performing a fraud risk assessment will help the business determine its areas most at risk of costly fraudulent claims and, in turn, allocate resources and develop necessary policies and procedures to protect those areas.
2. Promote quality data. As the saying goes: garbage in, garbage out. Before effective analysis can be done, a company must institute measures to maximize the quality of data. The business needs to establish consistent rules and standards for data capture that help ensure valid, usable information. These principles should also apply to external data — consider the source, its collection methods, etc.
3. Apply analytics. Fraud experts can employ data analytics to uncover anomalies and flag potentially fraudulent claims that warrant further investigation. But analytics can also play a role in fighting fraud before claims are even made. Insurance companies, for example, have increasingly employed predictive analytics to identify insureds who are more likely to submit fraudulent claims.
4. Integrate antifraud measures into daily operations. The companies that have seen the most success in combating claims fraud take an integrated approach. Instead of isolating the antifraud function, they share information and integrate fraud prevention and detection techniques across departments and business units. And they do so along every step of the claims process — from claims acceptance to resolution.
Head in the game
The application of a strategic approach to combat claims fraud, coupled with the integration of technological advances, such as predictive analytical techniques, can help companies today be more proactive in deterring these types of crimes. Every company susceptible to claim fraud schemes should keep their heads in the game and watch out for fraudulent payouts.