Rethinking business case for anti-fraud programs in insurance – EY

Article Synopsis :

Insurance fraud is widespread and quite varied in terms of form.

Fraudsters are relentless. Digital fraud-detection tools offer protection

In “Rethinking the business case for anti-fraud programs in insurance”, EY explores the impact and extent of claims, underwriting and application fraud; highlights the business case for improved anti-fraud capabilities; and outlines a series of steps to create a highly effective and efficient fraud operating model that moves detection as far upstream as possible leveraging advanced analytics to generate significant benefits to the business (and, by extension, policyholders).

Fraud’s impact on insurance is massive. The report, citing various industry groups, quantifies the financial impact of fraud as follows:

• $80 billion annually, across all lines, in the U.S. alone
• 45% of carriers say claims fraud is 5% to 10% of claims costs, with 32% of carriers indicating it may be as high as 20%
• 10% of all property and casualty claims are fraudulent
• France’s fraud bureau estimates that 15% of claims paid, representing between 4% and 8% of premium collected, are fraudulent, equating to €2.5 billion

Based on this data, EY asserts, the business case for enhanced anti-fraud capabilities is both clear and highly compelling. Employing the right anti-fraud measures can deliver the following benefits:

• 4% of total claims spend saved via an optimized anti-fraud program
• Even better results for insurers taking a truly end-to-end and cross-functional view of fraudulent activities
• Better insights and increased confidence in the organization’s ability to detect fraud often leads to an increase in the volume of claims that can be handled with minimal touch or on a straight-through basis
• Gains can also be realized via more integrated operations that closely link and synchronize actuarial and product development functions to claims and investigations in a kind of ‘closed-loop’ system

The paper presents a high-level road map for building anti-fraud programs incorporating multidimensional, strategic, organizational, process, and technology/data components.

Link to Full Article:: click here

Link to Source:: click here