As carriers look to modernize, challenges emerge. Aside from some of the most obvious obstacles to digital transformation, another worry some may have in the back of their mind is the possible impact on fraud.
In this month’s newsletter, we’ll address why this viewpoint may be shortsighted, and talk about how the right technology can actually give carriers an edge when it comes to detecting fraud.
Tech creates more efficient fraud detection
It's no secret that fraud is an ongoing issue in the life insurance space, and that the tech age has provided bad actors with new avenues to find vulnerabilities and blind spots in detection and security protocols.
However, letting fear of fraud prevent your organization from modernizing means missing out on opportunities to grow revenues and reduce costs. Moreover, a sophisticated tech infrastructure can actually be leveraged to help prevent and root out fraud. Here are a few examples:
Digital identity verification
Digitizing your operation allows for the introduction of stronger identity verification protocols. This can be as simple as a multi-step process in which applicants or claimants verify their own identity, or as robust as real-time verification of a user’s digital footprint and identity through internal or third-party software on the back end. Either way, it’s faster, more accurate, and an important safeguard against fraud.
Data analytics and machine learning
New tech allows machine learning algorithms to analyze vast amounts of data extremely quickly. It can then begin identifying patterns and anomalies, and drawing connections to help flag suspicious results for investigation. The system can also score applicants or claimants, ranking them by likelihood of fraud. Not only does this save time and money by automating what has traditionally been an exhaustive human process, but it can also help reduce instances of bias or error.
Data sharing and collaboration
It’s important to note that data tools help people, they don’t replace them. On the front end, these tools can save valuable time and money, and create systematized, highly actionable data packets. This arms in-house fraud detection teams with what they need to collaborate with other internal teams, outside investigators like law enforcement, or even other insurance carriers.
As bad actors become more sophisticated, it’s important to have the technology infrastructure in place to combat them more effectively. That’s just one of the reasons that carriers shouldn't let fraud fears stymie their efforts to modernize and integrate technology. At the end of the day, it’s about getting more efficient and protecting the bottom line.
Q & A with Kelsey Goettsch, Investigation Support Analyst
Q: What is the fastest growing insurance fraud trend?
A: You may be surprised to learn that in one of the fastest growing insurance fraud schemes, the perpetrators may not even know the policyholders personally. In this scheme, a group of fraudsters pool their resources to take out policies on a large number of target individuals. The group receives a payout if and when one of their targets dies, splitting the death benefit among group members. In these cases, the targets are typically people with little to no online or digital footprint. This can make it easier to avoid certain medical or health history red flags and obtain coverage.
This is just one of the ways that fraudsters are becoming more sophisticated, though new tools and tech have helped give carriers a leg up when it comes to identifying and rooting out fraud. In the above example, data systems can help identify patterns that emerge through repeated fraud instances, making detection likelier and more efficient.
Missed last month's newsletter?
How data grows carriers revenue: The emergence of sophisticated new tools allows carriers to harness the power of data, powering transformation, reducing costs and unlocking new audiences. Read more.
We’d love to meet in person. If you’re attending any of the following events and would like more information about the Bestow SaaS and Marketing technology solutions, contact [email protected].
ACLI Annual Conference, Washington D.C.
Jeremy Bill, Chief Insurance Officer