FICO Launches New Claims Fraud Product

April 25, 2012

A new product aimed at helping insurers curb the growing problem of insurance claims fraud was just introduced by FICO, an industry provider of analytics and decision management technology.

The FICO Claims Fraud Solution uses three integrated technologies to identify more fraudulent insurance claims faster, in order to help insurers cut general insurance fraud losses that last year reached an estimated $52 billion worldwide, according to research and advisory firm Celent.

Challenging economic conditions have pushed many kinds of insurance fraud, such as auto claims fraud, to new highs in markets worldwide.

In the US, insurance fraud accounts for an estimated 10-20% of insurance premiums; that number climbs as high as 25-30% in other markets, such as Brazil. A single scheme uncovered by the FBI in February 2012 racked up an estimated $279 million in losses. In the UK, the Association of British Insurers says insurance fraud costs an estimated 2 billion pounds Sterling per year.

The product integrates predictive models based on neural networks, modeled after the human brain, to identify potential fraud either at the point of sale or at first notice of loss, so that insurers can catch fraud before the claim is paid. The results are prioritized so that investigation actions are more efficient, focusing on those claims most likely to be fraud.

Fraud investigators can use the product’s business rules management system, to identify suspicious claims that match known fraud schemes. With link analysis capabilities, fraud investigators can scour claims data to find previously undetected fraud based on connections to confirmed fraud cases found by the business rules. This technique is particularly useful for uncovering fraud rings, such as “cash for crash” auto fraud schemes where criminals cause collisions with innocent drivers in order to file fraudulent whiplash and other claims. The combination of predictive analytics, link analysis and business rules finds up to 50% more fraud over a rules-based system alone.

“Personal lines and commercial lines claims deserve the same vigilance that insurers are already applying to healthcare insurance fraud, waste and abuse,” said Russ Schreiber, vice president and insurance practice leader at FICO.

Source: FICO

Was this article valuable?

Here are more articles you may enjoy.