Claims scoring has emerged as an effective way to mitigate losses stemming from fraud. Insurers begin by establishing a rules-based system. Scores are predicated on the rules. If a score reaches a certain threshold, an insurer flags the claim and takes appropriate action.Will Fulton, president of Charlestown, Mass.-based technology solutions provider First Notice Systems, says that "insurers place a weight on custom fraud indicators during call flow to a call center."
First Notice Systems offers insurers ClaimsCapture to detect suspicious claims earlier in the process. The solution is largely targeted to auto insurers. A score is tallied for all fraud indicators and the score is compared against custom thresholds established by insurer.
Red flags indicate to fraud investigators when a claim should be dissected. For instance, a claim that has a post office box listed rather than a street address can be a fraud indicator, and increase a score. So is a claim filed on a policy that was recently bound.
"Insurers are able to modify the rules that add weight to a score. They might find that one rule is adding to a score and bringing back a high number of suspicious claims. On second review, they might determine that certain rules should be deleted because the system is being inundated with fraudulent claims," explains Fulton.
Ultimately, the objective is to "capture, grade and route this information to the right people in an organization. If it takes us 10 minutes to gather data on a potential fraud, an SIU at an insurance company has the information 30 seconds later."
San Rafael, Calif.-based technology provider Fair Isaac Corp. has a solution offered to insurers where, on a scale of 0 to 1,000, a claim scoring 200 would indicate a lower risk than one scoring 800.
Insurance companies can set thresholds, using rules to automatically route all claims scoring above a certain number to investigative staff, according to Fair Isaac.
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