The extent of insurance fraud requires that carriers band together tocombat a scourge that experts say costs carriers in excess of $100 billionannually. The Fraud Defense Network is one example of industry cooperationin an ongoing battle to fight insurance fraud.Founded in 1994, the Fraud Defense Network is an online destinationthat links insurance companies, third-party administrators and governmentagencies. Its mission is to assist in the prevention, detection andinvestigation of fraudulent activity primarily by maintaining onlineinvestigative databases and providing members with the opportunity to shareinformation. More than 450 organizations participate in the Fraud DefenseNetwork, including 39 insurance companies.
The Fraud Defense Network currently has more than 7 million life,health and disability claims in its database. For a fee of $1,000 a month,insurance companies have access to the organization's 11 databases,including the Insurance e.Canvas database. This tool uses push technologyto alert all members when a carrier makes a specific request forinformation.
Another tool issues fraud alerts to members when a carrier reports anincident to the Fraud Defense Network. "We built a secure, encryptedprocess that takes the information and pushes it out to all authorizedusers," explains David Shaul, executive director of the Fraud DefenseNetwork and vice president of insurance and e-commerce for Alpharetta, Ga.-based ChoicePoint Inc. "The members receive the e-mail alert and they canthen log into our password-protected database to find out what the alert isabout."
Each month, the Fraud Defense Network receives in excess of 600,000hits to its Web site, www.fraudDefense.com.
"The Internet provides the connectivity and a standardizedcommunications link for the anti-fraud community," Shaul says. "The networkreally is a community of investigators who are working as a collective unitto fight fraud."
