In some ways, insurers' fraud-fighting efforts are similar to this nation's so-called war on drugs: Both endeavors require the right mix of people, technology and information to identify the criminals. Also, public awareness campaigns are part of the effort to change consumer behavior, whether it's to prevent drug use or prevent policyholders from filing bogus claims. And both involve elements of organized crime that use sophisticated tactics and technology to perpetrate their crimes.However, despite all of the resources that have been dedicated over the past decade to fighting drugs and fraud, we're no closer today to eliminating either problem. There have been many high-profile successes for each campaign, whether it's the seizure of a ton of cocaine on a ship at sea, or the combined work of insurance fraud investigators and law enforcement officials to uncover a multi-state, staged-accident fraud ring. But the fact remains that insurance fraud continues to cost the insurance industry $30 billion a year-and that's just counting fraud perpetrated against property/casualty insurers.

Why isn't more progress being made to identify fraudulent claims before they're paid? Actually, carriers that have invested in technologies and training to help their claims handlers and investigators identify suspect claims, such as MetLife Auto & Home and Erie Insurance Group, are putting up a good fight. Last year, Erie's loss impact--the amount of claims payments that were not paid due to alleged fraud--was $5 million, a 31% improvement over its fraud mitigation results in 2003.

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