News release

Study: Insurance Fraud Surging, Insurers Automating Detection

11/29/2016

imageWASHINGTON, Nov. 29, 2016 — Insurance fraud is rising, and more insurers are responding forcefully by automating investigations with skilled technology, reveals a study of insurer tech usage by the Coalition Against Insurance Fraud.

More than 60 percent of insurers say fraud has climbed over the last three years, says the biennial study, “State of Insurance Fraud Technology.” The Coalition conducted the research in partnership with the analytics company SAS this summer. Some 86 insurers with a significant share of the property-casualty market took part.

“Insurer investments in fraud-fighting tech are paying bigger dividends, and faster. Insurers continue gaining confidence that tech is a nucleus of their efforts to stem surging fraud crimes,” said Dennis Jay, executive director of the Coalition.

Mounting pressure from schemes has ignited a growth of insurer anti-fraud tech deployment:

  • Nearly 75 percent of insurers deploy automated systems to detect false claims — a large increase over the 2014 and 2012 studies;

  • Automobile premium evaders are growing targets of anti-fraud efforts. Insurer use of rate-evasion technology has jumped 40 percent since 2012;

  • Of insurers adopting anti-fraud tech, 90 percent use business rules and red flags to auto-detect suspicious claims; and

  • Use of predictive modeling and link analysis continue rising. Insurer use has increased 21 percent in two years.

    In other findings:
    Cyber fraud. Nearly one of five insurers use tech to combat this growing threat.

    More referrals. For the first time, insurers (six percent) received at least 60 percent of referrals from tech systems.

    Targeted crimes. Technology’s greatest impact comes in pursuing personal-auto scams, dismantling organized rings and uncovering crooked medical providers.

    Key benefits. Improved claims outcomes plus more and better claims referrals are key benefits of tech.

    False positives. Nearly seven of 10 insurers said their systems produce too many false positives. They divert time and resources from pursuing dubious claims. Insurers who use a “blend” of technologies report fewer false positives.

    Resources. Lack of IT resources — budgets and in-house expertise — is the biggest challenge SIUs face in using technology. Still, one-third of insurers said they expect increased tech budgets in 2017.
    Most said they plan to expand use of predictive modeling.

    “An anti-fraud strategy that incorporates the right mix of technologies and skilled employees is key to more-efficient fraud detection. That is a powerful combination,” said James Ruotolo, Director of Product Management in the Global Fraud and Financial Crimes Practice at SAS. “As insurers adopt new technology, they also have to hire and train a new generation of fraud analysts and investigators to make the most of that technology.”

    Download the full State of Insurance Fraud Technology report for more details.

    About the Coalition
    The Coalition Against Insurance Fraud is a national alliance of nearly 150 organizations representing consumers, government agencies, insurers and other businesses. Founded in 1993, the Coalition combats all forms of insurance fraud through legislation, consumer education and research.

    About SAS
    SAS is a leader in analytics. Through innovative analytics, business intelligence and data-management software and services, SAS helps customers at more than 80,000 sites make better decisions faster. Since 1976, SAS has been giving customers around the world THE POWER TO KNOW®.


    CONTACT:
    Dennis Jay, Coalition Against Insurance Fraud, 202-393-7333;
    Casey Novak, SAS, 919-531-2670