Improving Insurance Fraud Prevention with Active Fraud Monitoring

Among the greatest risk factors that insurance companies face is the potential for fraudulent claims filed by customers. The Federal Bureau of Investigation (FBI) estimates that fraud costs insurance companies more than $40 billion per year, and that just accounts for the non-health insurance fraud claims. That is money flying out the door every year that shouldn't be lost in such a fashion. This is why it is necessary to think about the fraud monitoring processes that an insurance company can use to better protect itself from fraudulent claims.

Mobilizing Active Fraud Monitoring Measures

It is best to try to get ahead of the criminals who might file fraudulent insurance claims. Getting ahead of the scams that these criminals mean that you can potentially stave off a fraudulent claim before it ever takes root. We will review some of the best practices for taking on fraudulent claims.

Focus on Your Claims Control Process

It might seem blatantly obvious that you should create a claims control process to help make it easier to audit the claims that do come in. Many life insurance companies waive the need to present a death certificate for many policyholders to speed up the claims process and avoid the uncomfortable conversation that they would otherwise need to have with a policyholder. This is helpful in the sense that agents can avoid the awkwardness of having to ask a policyholder to produce a death certificate when they seek to claim life insurance benefits. However, this also leaves open the door for fraud.

Insurance companies should run random post-claim audits to ensure that the death is legitimate. Otherwise, criminals may try to claim that individuals who are still alive and well have died just to capture more insurance dollars for themselves. Insurance companies should work with industry resources such as the International Claim Association (ICA) to assist them by providing useful resources such as fraud alerts. This allows the insurance company to jump into action and further investigate the potentially fraudulent claim.

Maintain Up to Date Training

One thing that you know for certain is that fraudsters and criminals will always work to continue to update their scams. They are constantly trying to stay a step ahead of the companies that they defraud. This means that continuously training employees on the latest scams is necessary to keep defenses strong. RGA explains it like this:

Fraudsters continually adapt and innovate to find new avenues to exploit. Meanwhile, claims examiners often receive only initial fraud prevention training without any ongoing follow-up. As a result, they may not be aware of the latest schemes and are ill-equipped to identify emerging red flags. Proper preparation requires vigilance in staying up to date on fraud trends paired with consistent training.

It takes a significant amount of time to keep employees constantly updated on the latest frauds and how to defend against them. That said, the training that you equip your employees with is well worth it.

Inform Everyone in the Organization of Fraud Efforts

Employees that work in the claims and underwriting departments are the first line of defense against those who might try to file a fraudulent claim. However, this is not the only part of the organization that should be aware of scammers and frauds. Instead, it is also ideal to inform everyone within the organization about the possibility of fraudulent claims coming through the doors.

When another department notes something unusual in their paperwork, it is best when they can raise those issues with someone who knows what to do about it. Therefore, every department must be informed about the issues related to potential frauds and scams.

Scan Social Media for Fraudulent Claims

You should assemble a social media detection team that performs social media investigations to determine the legitimacy of the claims made. For example, one might claim that they have been injured in a way that precludes them from enjoying the normal physical activities that they otherwise would have engaged in. However, when your team has special investigations unit software that they can use to detect unusual activity on social media. This software may detect red flags in terms of what your policyholder has posted on their social media accounts. This might make it possible to avoid paying out on fraudulent claims.

Attend Conferences About Fraud

It is one thing to inform your employees about the different frauds and scams that will have an impact on your life, but it is something else entirely to learn more about them yourself. Stay informed by attending conferences that specifically focus on this topic. There are several reasons to attend conferences that keep you informed about fraud efforts, including:

• Meet Your Peers - Simply being around people who are similar to you and have similar interests can be extremely helpful in your quest to expand your knowledge about how to stop the latest fraud efforts.
• Learn New Industry Secrets - You must stay informed about the latest industry secrets related to preventing fraud. New industry secrets emerge all the time, and you want to be positive that you take the time to learn about them. You may come to learn about new ways of training your fraud detection team, new types of threats that have emerged, and better ways to put them to rest.
• Access Necessary Resources - Many of the attendees at the conferences that you go to are organizations and companies that offer you the full slate of resources that you need to take on the insurance fraud situations that may arise.

These are just a few of the reasons why you should punch your ticket for the next insurance fraud conference that takes place in your area. Even if you have to travel some distance to reach the conference, it is still worthwhile when you consider the benefits that you can get from a conference like this. Keep that in mind as you work out how to get yourself to the conference.

Prepare for the Threats of the Future

There are certain threats that you might not even be thinking of at this time. Scammers are always refining their approach to ensure that they can continue to do what they can to get at the funds that they are attempting to steal. Take all of the advice mentioned above to heart and understand that it can be applied to help protect yourself against possible threats in the future. You should always be forward-thinking like this to do everything you can to keep yourself a few steps ahead of the scammers.

At the end of the day you should:

• Perform regular audits
• Trust but verify what policyholders are telling you.
• Stay informed about the latest types of scams
• Attend informational conferences
• Communicate with others in your field

If you do these things, you should be in great shape to protect yourself against the scams and fraudulent claims that might be filed.

REFERENCES

• https://www.fbi.gov/stats-services/publications/insurance-fraud
• https://www.claim.org/
• https://www.rgare.com/knowledge-center/article/6-claims-best-practices-for-life-insurance-fraud-prevention
• https://asiii.com/client-portal/why-we-gather-the-importance-of-attending-conferences/