Why is there so much fraud in the insurance industry – and how has the fraud landscape changed over the years?
Historically, the types of fraud that have occurred have been fairly consistent. Staged burglaries and thefts, mysterious disappearances and false “slips and falls” at work are all common. What has changed is digital media. With the help of technology, people can now change and manipulate everything from photographs to invoices and receipts. As the prevalence of this type of fraudulent asset has increased, we have had to scale our efforts to continue fighting it.
Why is the fight against fraud so important?
In the modern world, speed is an expectation in all industries. People do not want to wait. With claims, they want a quick and quick solution. In the coming years, we will see a rapid shift towards “here, right now”; that enables people to process a claim and get their refund immediately.
In order to be able to adequately enforce claims for a quick solution, it is crucial that the insurance companies really protect themselves against fraud. With the addition of that speed and ease, the insurance company has basically made the fraud offense even more convenient for those trying to solve it. With a fast processing time, it is possible to submit a fraudulent claim and get a check linked to the bank within a few minutes. The best way to protect yourself as a carrier, and in turn your insured, is to invest in robust artificial intelligence (AI) and anti-fraud programs.
What distinguishes Central’s attitude to fraud from others in the industry?
Anyone can talk about red flags, but the important thing is how you act on it and renew yourself for it. We are constantly thinking outside the box about how we use technology, interfaces with our claims partners and are creative in the development of training platforms for anti-fraud.
We do not hide what we do or how we do it. We want our agents and policyholders to be educated about fraud and how it affects them. We also want them to know that Central is constantly thinking of new ways to identify and prevent it from happening because every time we do so, our policyholders save money in the long run.
How do you use technology to defeat scams?
We use AI and machine learning to detect questionable claims and subrogation potential. We also use a rules-based platform that has over 4,000 red flags built into the detection system, as well as interfaces with the National Insurance Crime Bureau’s Questionable Claim Database and many other platforms. We also work with TransUnion to establish financial motives at first notice of loss from an automation perspective.
For example, if a person reports that they have a fire claim, AI’s brain interacts with TransUnion. It looks for financial indicators that are specific to insurance fraud related to fire, and then searches for any slim judgments, bankruptcies or court aspects. Once this information has been collected, it feeds everything back to the AI bit to calculate a risk point for fraud.
For example, we got a hit from our analytics platform when a woman reported that she had lost a single $ 40,000 diamond earring in Hawaii. It took her a year to report it, and her explanation for the delay was that she knew she would be going back to Hawaii next year and planned to dive in search of the missing earring. Once assigned to our interview and investigation team, she decided she wanted to withdraw her claim.
This autumn, Central will also be the first operator to link geospatial technology with AI. Geospatial technology is high-resolution aerial photography – like enhanced Google Earth imagery. We will enter the images into our AI which automatically detects deviations such as previous roof damage when a claim is submitted.
Interested in learning more about fraud? The National Insurance Crime Bureau offers a wealth of resources including VINCheck, a free public lookup service to determine if a vehicle has been reported stolen or salvaged, as well as dozens of articles on how to avoid falling victim to scams and frauds.
Read more about International Fraud Awareness Week at fraudweek.com.
Jeff Lieberman is currently Head of Fraud Prevention and Recovery at Central Insurance in Van Wert, Ohio. Previously, Jeff was the director of SIU and subrogation in Miami, Florida, at Assurant for six years. He also served as SIU Field Manager for Sentry Insurance in Stevens Point, Wisconsin, for 12 years. Jeff has over 20 years of law enforcement experience, 12 of them as Wisconsin Police Chief. He was awarded the Police of the Month Award by the National Law Enforcement Memorial Fund for developing unique and innovative crime prevention programs. His career began in the United States Air Force as a police officer where he served for four years and when he left he was immediately hired to begin his law enforcement career. His guiding philosophy is to be unique, innovative and creative with Special Investigations. He has extensive knowledge of fraud analysis that includes machine learning, artificial intelligence and robotic process automation that is at the forefront of today’s advanced analysis technology.
Anthony Gaytan is a business analyst for the fight against fraud at Central’s special investigation unit. He has a bachelor’s degree in political science, a bachelor’s degree in Latin American and Caribbean studies, a master’s degree in both criminal law and public administration and a diploma in human resources and management. Anthony has also received his Certified Fraud Examiner (CFE) designation from the Association of Certified Fraud Examiners (ACFE), as well as the Certified Insurance Fraud Analyst (CIFA) designation from the International Association of Special Investigation Units (IASIU). Anthony has also participated in the academies of inquiry and analysis conducted by the National Insurance Crime Bureau (NICB).
The information above is of a general nature and your insurance and coverage provided may differ from the examples provided. Please read your entire policy to determine your actual coverage.