Insurers believe that fraud in on the rise, and they are increasingly turning to advanced analytics to fight it, according to the results of a survey released Wednesday by the Coalition Against Insurance Fraud.
The Coalition said the survey of 84 carriers that in conducted with the help of analytics provider SAS found that 65% reported an increase in fraud in the past three years, while only 10% said fraud decreased. The rest said it remained the same.
What are they doing about it? Two-thirds of respondents say they will earmark funds for predictive tools. That compares to just 19% in a 2016 survey.
Carriers are also investing in link and social media analysis: 43% of carriers surveyed said they plan to invest, compared 16% three years ago.
Artificial intelligence emerged as a new investment for fraud fighters. The Coalition said 21% of respondents said they plan to invest in AI technology in the next 12 to 24 months.
“Advanced analytics eclipsing investment in old-school technology signals an industry momentum shift,” said David Hartley, director of insurance solutions at SAS. “Capabilities like predictive analytics, machine learning and AI deliver much deeper insights than business rules alone.”
The Coalition said automated red flags and business rules remain popular, but are fading as predictive analysis, exception reporting, text mining, link analysis and AI gain traction. Insurers are also expanding their range of anti-fraud tools.
Detecting claims fraud remains the top use of anti-fraud technology, 90 percent of insurers report. Detecting cybercrime also is rising.
The Coalition said the survey showed that insurers increasingly are hiring consulting firms to build and maintain their anti-fraud systems. This coincides with more third-party system providers coming online and prices dropping.
The survey also showed that the use of unstructured data is increasing as insurers adopt newer tools to cull for evidence. Also, more insurers favor quality of case referrals their systems generate over quantity. The percent of fraud referrals insurers receive from their systems has stayed steady.
On the down side, three of four insurers say that integrating data and poor data quality are some of their biggest system challenges. A lack of information technology resources also is a problem.
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