Following several indicators, fraud is rampant in the insurance sector. According to the Federal Bureau of Investigation (FBI), the U.S.’s overall cost of insurance fraud is above $40 billion a year. These figures result in premium increases of $400 to $700 every year for the average American family.
Insurance companies must fight fraud aggressively to prevent costly lawsuits and other expensive interventions. It starts by taking a constructive approach towards detecting fraud. Companies ought not to wait for fraud to happen before dealing with it. Instead, they must take steps to place procedures that recognize possible fraud early on and enable them to react upon discovery promptly.
The Law Offices of Anthony Carbone recommends taking the following strategies to prevent insurance fraud:
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Establish a Solid Base
A conceptual structure can be an out-of-the-box solution that digitizes the claims practitioners’ operational expertise and allows process management. In addition, it can be a complete social networking study of the relevant parties in a claim. Insurance companies can then apply various third-party data captures, criminal background checks, evaluation engines, and other resources to the mix. To ensure these tools work more efficiently, you need to emphasize the need for early fraud detection to your staff first.
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Recognize the Degree to Which Fraud Is A Possibility
Understanding the relative level of fraud risk for each form of claim helps special investigation units (SIUs) to take the most efficient and cost-effective action possible. With limited funds to allocate to fraud investigations, you should concentrate your efforts on the things with the highest possibility of fraudulent claims. For instance, a theft claim of high-cost jewelry is more probable than a phone or laptop.
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Use Data Analytics to Identify Fraud
Fraud comes in a variety of forms. Generally, there are two types of insurance fraud. Criminal fraud, on the one hand, is committed by perpetrators used to milking the scheme. On the other hand, cultural fraud is achieved by a legitimate claimant who exaggerates or is opportunistic about a claim. You can identify fraud using data analytics. Insurers may use predictive modeling to create a ‘Suspicion Score,’ a value for the likelihood of fraud, by evaluating previous fraud cases.
That said, criminals are constantly on the lookout for new means to commit fraud, as well as developments in your business. Thus, it would be best if you always were prepared to adapt quickly.
Skilled offenders, for instance, are advanced enough to get familiar with the analytical methods used by insurance firms to identify fraud and adjust their techniques accordingly. Insurers, therefore, must identify emerging fraud patterns early and take action to remain clear of fraudsters as the battle against fraud gets more aggressive.
Stay Ahead of the Curve When It Comes to Fraud Prevention
The nature of the insurance industry is changing, and anti-fraud approaches must adapt. Organizations that implement advanced fraud techniques and tactics have a better chance of keeping fraudsters at bay. Those that carry on as usual risk increasing their liability and losses. For more information on how to curb insurance fraud, talk to an experienced Bayonne Personal Injury Attorney right away!