![]() Advanced solutions enable insurers to model relationships between entities filing claims and new businesses. Analysing patterns in large volumes of claims through a network link analysis is a particularly effective way for insurers to get ahead of organised fraud groups. Insurers can identify links between seemingly unrelated claims in seconds to catch cross-product fraud, analyse activities at a network level using social network diagrams and data mining capabilities, and uncover evolving threats sooner. In turn, false positives are significantly reduced, which allows investigators to prioritise higher-risk insurance fraud and improves overall customer satisfaction when filing an insurance claim.Īdvanced fraud detection solutions also deliver a singular view of risk by providing an end-to-end solution that makes customer claims across all lines of business visible. As claims are settled, they are captured in the system to help the AI solution learn the difference between valid and fraudulent claims. Unlike traditional systems for identifying suspicious activity, AI and ML solutions adapt to changing behaviour automatically, making it possible to detect fraud faster and with more accuracy. The use of modern solutions, such as artificial intelligence (AI), machine learning (ML) and data analytics tools, can help insurers identify potential fraud in individual data, as well as on platforms like social networks where organised schemes involving multiple linked claims are taking place. With fraud tactics becoming more sophisticated, insurers should consider stepping up fraud strategies to go beyond simple transactional monitoring systems. Outsmarting fraudsters with Advanced Analytics This reality has strained existing controls that detect, prevent and mitigate fraudulent activity, and made it important for industry leaders to consider adopting an advanced fraud detection and prevention solution to address evolving fraud risks. Today, insurance fraud comes in an increasing variety of forms with sophisticated, organised attempts across every aspect of the industry. Traditionally, fraud detection focused on opportunistic activities in which an individual took advantage of a situation to pay a lower premium or exaggerated a claim to obtain a higher pay-out. And in Malaysia, fraudulent motor insurance claims alone are costing the industry RM 1 billion a year. The increase was largely due to a jump in reports related to fraudulent health insurance claims. In 2020, the Government of Singapore received more than three times the number of reports of fraudulent claims compared to 2018. In Singapore, common types of insurance fraud are medical fraud which remains rampant travel insurance fraud where individuals make false claims in the hope of getting a free vacation at the expense of the insurer and motor insurance fraud where claimants make false or inflated claims by exaggerating injuries or property damage. Common insurance fraud includes providing misleading information and evidence to obtain insurance cover, inflating claims, submitting false claims for injuries or damage that never happened, intentionally causing accidents, and data theft to get insurance or make a fraudulent claim. The Insurance Information Institute defines insurance fraud as an intentional deception committed against or by an insurance company or agent for financial gain. Your money is stolen, and your insurance premiums rise. As the Coalition Against Insurance Fraud says, insurance fraud means honest consumers and policyholders pay for these financial crimes. ![]() The pandemic and resulting economic environment have contributed to a notable increase in claims, which is also driving up fraud risks. Some analyst reports suggest that fraud cases account for between 10% and 15% of all insurance claims. ![]() The insurance industry is no exception – incidents of fraud have increased across the industry, as more processes are digitalised. Apart from the financial losses incurred, organisations also suffer from operational, reputation, and customer implications. Bad actors are quick to take advantage of opportunities for fraud presented by such features as digital promotions as well as social engineering scams.Ī recent survey found that in Southeast Asia fraud rates increased phenomenally in parallel to the surge in online transactions during the pandemic. ![]() An unfortunate corollary of the current accelerating transition to digital commerce is an increase in fraud and economic crime.
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