Insurers are caught in a bind when it comes to business growth and preventing insurance fraud, according to a new report from Forrester, titled “Prevent Insurance Crime With The Four Cornerstones Of Better Fraud Management”; growth nowadays—which means emerging technologies such as mobile and social—inherently presents challenges and open doors to fraud risk.
The four cornerstones suggested by Forrester are 1) rethink SIU teams, 2) establish standard metrics, 3) use mobile applications everywhere, and 4) improve data quality and increase data quantity.
That last one rings particularly true, as both insurers and fraudsters are attempting to use the same asset against each other: data. As of late, insurers are found losing that battle.
Forrester cites information from the National Insurance Crime Bureau stating that questionable claims identified jumped up 9.4 percent from 2010 to 2011, and “2012 is on track for even higher levels, with the rate of these suspicious claims up 20 percent over the same period a year earlier.”
According to the report, part of this surge is non-personal and non-paper-based interactions. The report points out that “the age of the consumer” exposes insurers as the top growth initiatives are bringing insurers into these uncharted, virtual waters—unfamiliar to the business enterprise, but familiar to fraudsters already inhabiting mobile and social spaces.
Forrester notes a lack in urgency as insurers see SIU organization as a cost that is currently being outweighed by satisfying consumers and a focus on the ease of doing business.
Therefore, the report concludes, incorporating fraud data into general business intelligence portfolios should become a priority. While fraudsters become more sophisticated and resourceful, so too should SIU teams. Forrester claims that fraud tool kits need to demand predictive analytics and business intelligence strategies that enable an early warning system and advanced detection/deflection.
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