Why is there so much fraud in the insurance industry — and how has the fraud landscape changed over the years?
Historically, the types of fraud occurring have been fairly consistent. Staged burglaries and thefts, mysterious disappearances and fake “slip and falls” at work are all common. What has changed is digital media. Using technology, people are now able to alter and manipulate everything from photographs to invoices and receipts. As the prevalence of this kind of fraud asset has increased, we’ve had to scale our efforts to continue combatting it.
Why is anti-fraud so important?
In the modern world, speed is an expectation across every industry. People don’t want to wait. With claims, they want fast-track, rapid resolution. In the years ahead, we will see a swift shift toward “right here, right now” that allows people to process a claim and receive their reimbursement immediately.
In order to be able to adequately execute rapid resolution claims, it’s critical that insurers are really protecting themselves against fraud. With the addition of that speed and ease, the insurance carrier has essentially made the crime of fraud even more convenient for those trying to pull it off. With a quick turnaround time, it’s possible to file a fraudulent claim and get a check wired to the bank within a few minutes. The best way to protect yourself as a carrier, and in turn, your insureds, is investing in robust anti-fraud artificial intelligence (AI) and programs.
What sets Central’s approach to fraud apart from others in the industry?
Anybody can talk about red flags, but what matters is how you act upon it and innovate for it. We are constantly thinking outside the box about how to use technology, interface with our claim partners and be creative in the development of anti-fraud training platforms.
We don’t hide what we’re doing or how we’re doing it. We want our agents and policyholders to be educated about fraud and how it impacts them. We also want them to know that Central is constantly thinking about new ways to identify and prevent it from happening because each time we do, we are ultimately saving our policyholders money in the long run.
How are you using technology to defeat fraud?
We use AI and machine learning to detect questionable claims and subrogation potential. We also use a rules-based platform that has over 4,000 red flags built into the detection system, as well as interfacing with the National Insurance Crime Bureau’s Questionable Claim Database and numerous other platforms. We also partner with TransUnion to establish financial motive at first notice of loss from an automation perspective.
For example, if a person reports that they have a fire claim, the brain of the AI interfaces with TransUnion. It looks for financial indicators specific to insurance fraud related to fire, then searches for any lean judgments, bankruptcies or court aspects. Once this information is gathered, it feeds everything back into the AI piece to compute a fraud risk score.
For example, we got a hit off of our analytics platform when a woman reported that she had lost a single $40,000 solitaire diamond earring in Hawaii. It took her a year to report it, and her explanation for the delay was that she knew she would be going back to Hawaii the next year and planned to scuba dive in search of the missing earring. Once it got assigned to our group for interview and investigation, she decided that she wanted to withdraw her claim.
This fall, Central will also become the first carrier to interface geospatial technology with AI. Geospatial technology is high-resolution aerial photography — like enhanced Google Earth visuals. We will feed that imagery into our AI which will automatically detect anomalies such as prior roof damage when a claim is filed.
Interested in learning more about fraud? The National Insurance Crime Bureau offers a host of resources including VINCheck, a free public lookup service to determine if a vehicle has been reported as stolen or salvage, as well as dozens of articles on how to avoid becoming a victim of frauds and scams.
Learn more about International Fraud Awareness Week at fraudweek.com.
Jeff Lieberman is currently the Director of Anti-Fraud and Recovery for Central Insurance located in Van Wert, Ohio. Previously, Jeff was the Director of SIU and Subrogation in Miami, Florida, at Assurant for six years. He also worked as a SIU Field Manager for Sentry Insurance located in Stevens Point, Wisconsin, for 12 years. Jeff has over 20 years of law enforcement experience, 12 of those as a Police Chief in Wisconsin. He was awarded the Police Officer of the Month award for the United States from the National Law Enforcement Memorial Fund for developing unique and innovative crime prevention programs. His career began in the United States Air Force as a police officer where he served four years and upon leaving, was immediately hired to begin his law enforcement career. His guiding philosophy is to be unique, innovative and creative with Special Investigations. He has extensive knowledge of fraud analytics which includes machine learning, artificial intelligence and robotic process automation which is on the cutting edge of today’s advanced analytics technology.
Anthony Gaytan is the Anti-Fraud Operations Analyst in Central’s Special Investigations Unit. He holds a Bachelor’s Degree in Political Science, an Undergraduate Certificate in Latin American and Caribbean Studies, Master’s in both Criminal Justice and Public Administration, and a Graduate Certificate in Human Resources and Management. Anthony has also earned his Certified Fraud Examiner (CFE) designation from the Association of Certified Fraud Examiners (ACFE), as well as the Certified Insurance Fraud Analyst (CIFA) designation from the International Association of Special Investigation Units (IASIU). Anthony has also attended the investigation and analyst academies conducted by the National Insurance Crime Bureau (NICB).