As insurance CEOs mull over their IT teams' plans to purchase new technologies, inevitably the decision boils down to this: What's the financial upside? It's an important question to ask, although a clear quantifiable answer is often hard to come by. However, two articles in this issue-fraud detection and financial reporting-offer clear-cut reasons for why insurers should consider implementing these business-supporting technologies.Fighting fraud is a multi-billion-dollar challenge for the insurance industry. Some estimates calculate the total annual cost of fraud across health, life and property/casualty lines is between $85 billion and $120 billion.
The cost of employing the number of professional fraud investigators necessary to tackle a $100 billion a year problem is obviously prohibitive. Indeed, an executive at one of the largest property/casualty insurers recently told me that her company doesn't consider fighting minor incidents of fraud worth the effort. But that's exactly why fraud technology can be so beneficial: It identifies the low-hanging fraud cases--which when added up can amount to big bucks for major insurers--and it enables SIU staffers to concentrate their professional skills on cracking the big fraud cases, such as the $100 million case in New York that involved Nationwide and Allstate last November.
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