Upgrading the tools for detecting insurance fraud in a modern way
Due to the pandemic, there have been significant alterations in the insurance industry, leading to essential modifications in operations to limit interruptions to business. Insurers acted promptly in response to the crisis by enhancing their use of digital methods for sales, customer service, and handling claims while also implementing a mixed working approach for their employees.
Despite the rise in claims, there is also an increase in the possibility of fraudulent activity. According to a survey conducted by Deloitte, over 70 percent of insurance companies in India have reported an increase in fraud cases, ranging from slight to significant, within the last two years.
The reason behind this sudden rise can be credited to the rise of digital technology, the trend of working from home, and the decreased level of regulation.
Furthermore, those who took part in the survey stated that the major obstacles they face are data accessibility and excellence. Concerns relating to data confidentiality are also a significant problem. The inability to effectively exchange information in the field and insufficient data to anticipate deceitful actions have complicated the detection and intervention of fraudulent activities.
Fraudsters can take advantage of loopholes in an organization’s system and controls to commit fraud. Additionally, the increased use of digital technology and focus on customer satisfaction may have unintentionally created more opportunities for fraudsters to carry out activities such as identity theft, deceitful misrepresentation, and false claims.
A successful Fraud Risk Management strategy for businesses should include measures that stop fraud from happening, identify instances of fraud, and have a proper plan in place to minimize any damage caused by fraud.
A great method to prevent fraudulent activities is by managing data efficiently.
Insurers need to start by arranging their data in a proper manner. This involves pinpointing the sources of data that are relevant and bringing them together onto a single platform or data storage unit known as a "data lake." Here, precise, comprehensive, and pertinent details are saved.
Using predictive analytics, it is possible to identify potentially fraudulent applications and claims by analyzing the histories, locations, and behaviors of the claimant, service provider, and agent. Additionally, this method can help reduce false positives, and detect premium frauds.
It is extremely important to keep up-to-date with the latest happenings if you want to spot fresh fraud patterns. Insurance companies ought to carry out routine market research to collect useful details about the current methods and areas where there are vulnerabilities.
Karthik works as a Financial Advisory Partner, while Mhapankar is a Financial Advisory Director at Deloitte India. The opinions they share are based on their own personal viewpoints.
