Insurance Fraud: Detection & Prevention Techniques
Insurance Fraud typically occurs when an insured or claimant fraudulently obtains a benefit or advantage to which they are not entitled or when an insurance provider intentionally denies a beneficiary some due benefits. The United States Federal Bureau of Investigation (FBI) notes that the most common fraud scheme is the embezzlement of insurance premiums ('premium diversion'). Other common schemes include asset diversion, workers compensation fraud, claims falsification, and fee churning in which a series of intermediaries take commissions through re-insurance agreements.
According to the Insurance Information Institute (III), $1.1 trillion in premiums is collected annually by the U.S. insurance industry. The total cost of insurance fraud unrelated to health is estimated to be more than $40 billion per annum, and most of that cost is passed onto consumers in higher insurance premiums of as much as $400 to $700 per annum. In contrast, the annual loss due to health care insurance fraud is estimated to be staggering $60 billion to $250 billion. Statistics from the National Insurance Crime Bureau (NICB) depicted a 19 percent increase in questionable claims starting in 2009.
Additionally, III analysis also showed that ten percent of the incurred losses and loss adjustment expenses each year in the property & casualty (P&C) insurance industry are due to fraud. Worse yet, there has been a minimal chance of detecting fraudulent claims resulting in the loss of tens of billions of dollars each year. Typically, P&C insurance fraud may be committed when an applicant misrepresents facts on an insurance application, policyholders as they file false or inflated claims, excessive billing of professional services, and agents who may backdate a policy prior to loss date.
Often, combating insurance fraud is complex and expensive. But, the losses are more costly. Many regulatory agencies are involved in combating such fraud as being insurance companies and investigative agencies. The development of predictive analysis of 'big data' is helping to combat such fraud by identifying patterns indicative of fraud in claims, new types of fraud, and fraudulent networks, among others. Link analysis can sometimes be used to examine relationships between organizations, people, and their insurance transactions to identify oddities suggestive of fraud, such as too many visits to a doctor. Such analyses can be enhanced by using GPS location and social networking information.
Insurance companies have an opportunity to adopt the advantages of big data analysis to increase the likelihood of fraud detection, to reduce the costs of fraud, and comply with the myriad federal and state regulations.
In this two hour LIVE Webcast, a panel of key thought leaders and practitioners assembled by The Knowledge Group will review Insurance Fraud and discuss Detection & Prevention Techniques including identifying and reducing fraud losses, reducing investigative costs, and enhancing regulatory compliance by adopting a robust anti-fraud program and using predictive analytics methods.
- Insurance Fraud – An Overview
- Insurance Fraud: Common Schemes
- Detecting Insurance Fraud
- Investigating Insurance Fraud
- Property & Casualty (P&C) – A Legal Primer
- Insurance Fraud – Statistics and Analysis
- 'Predictive Analytics' on 'Big Data'
- Reporting Insurance Fraud
- Regulatory Compliance
- Litigation Risks
- Best Practices
J. Michael Skiba, MBA, PHD, Vice President Counter Fraud Strategies
Strong fraud prevention and detection techniques should focus on:
- Reducing opportunity. This can be accomplished by the development of red flags, software integration, and other methods (to be discussed).
- Increasing public awareness. Studies show that the public generally "approves" of insurance fraud, yet, there are proven ways to help deliver a strong anti-fraud message to help combat this mind-set.
- The role of psychological theory and fraud. Fraudsters justify this crime according to entitlement and other theories; all of which will be discussed.
- Integrating criminological theory into counter fraud efforts. An awareness of the cognitive perspective of fraud offenders will assist with highly effective counter fraud efforts
- The current international trends in fraud detection and prevention. Discussions will include global trends in fraud fighting and their possible application in the U.S.
Robert J. Bodoni, CIFI, FCLA, AIC, AIS, Regional Manager, Special Investigation Unit
- The Importance of Maintaining a Heightened Awareness of Fraud Through Training and Communication
- Back to Basics—In a world of easy access to information, there’s nothing better than basic fundamentals
- Compliance, Compliance, Compliance—Keeping yourself ahead of the curve by diligent reporting and record-keeping.
Sally Welsh, Assistant Director, Fraud Investigation & Dispute Services
Ernst & Young LLP
- Common fraudulent practices in general insurance
- The importance of a robust fraud framework
- The use of social media in fraud detection
- Big data – Using the data you have available to identify inconsistencies and suspicious activity
- Trend analysis – identifying fraudulent activity through trends.
Who Should Attend:
- Fraud Litigation Lawyers
- Insurance Fraud Investigators
- Hospital Insurance Administrators
- Health Care Managers
- Human Resources Managers
- Corporate Managers
- Business Owners
- In-House Counsel
- Risk and Compliance Managers
- Senior Officers from Insurance Companies
- Insurance Procurement and Payment Managers
- Other Interested Professionals
Dr. Skiba (also known as "Dr. Fraud") has worked in the insurance fraud industry for 22 years in various claims, Special Investigations, and leadership roles. He is currently Vice President of Counter Fraud Strategies at INFORM, an international fraud solutions company. He has also been a professor for 12 years and is currently Lead Faculty of Fraud Management at Colorado State University Global Campus. He is an international speaker and regular publisher on the topic of insurance fraud. He holds an MBA and a PhD with a concentration on economic crime and insurance fraud. He is also the President of the NY Chapter of the International Association of Special Investigative Units.
Dr. Skiba (also known as "Dr. Fraud") has worked in the insurance fraud industry for 22 years in various claims, …
Rob Bodoni is a SIU Regional Manager for Metlife. He is responsible for the oversight of investigations throughout a multi-state territory, the development and rollout of national training initiatives, producer/underwriting training, as well as public outreach programs.
Mr. Bodoni began his career with MetLife as a SIU Supervisor. He then became the National SIU Trainer in which he developed and delivered a number of fraud awareness training courses countrywide. Since then, he has held various management positions within SIU. In 2007, he was elevated to the level of Regional Manager.
Over the years, he has provided insurance fraud prevention training to members of law enforcement and insurance industry professionals. In 2001, he was recognized by the Massachusetts Insurance Fraud Bureau for his outstanding and invaluable contributions toward the fight against insurance fraud.
Before joining MetLife, he was an SIU Investigator for CIGNA Property and Casualty Insurance Company, a Special Agent for NICB, an investigator with the National Investigation Bureau and a police officer in a north shore suburb of Boston.
Mr. Bodoni currently serves as Board of Director for IASIU in which he chairs the Certification and Education Committees. He is a member of the Massachusetts Governor’s Council as a Notary Public, a Licensed Private Detective as well as holds a Massachusetts Producer License.
Mr. Bodoni holds the certification of CIFI as well as has earned the professional designation of FCLA through the American Educational Institute. In 2011, he completed his AIC designation and in 2012 his AIS designation. He has written a number of published articles addressing insurance fraud detection, prevention and investigation.
Mr. Bodoni holds a Bachelor of Science Degree in Criminal Justice (Cum Laude) and a Master of Science degree in C.J. Administration both from Northeastern University in Boston.
Rob Bodoni is a SIU Regional Manager for Metlife. He is responsible for the oversight of investigations throughout a multi-state …
Sally has over ten years’ experience covering AML, regulatory sanctions, accounting and fraud investigation. Sally is an Assistant Director in the Fraud Investigation & Dispute Services (FIDS) practice specialising in the Financial Services sector. Sally joined EY in 2015 and is based in the London office. Prior to joining EY, Sally was the Group Deputy Money Laundering Prevention Officer for a large UK-based insurance group. She was responsible for AML and Sanctions policy and oversight across all operations globally, both insurance and asset management. Sally worked in the Forensic Investigations practice at a Big 4 Practice from 2008 until 2013 specialising in AML and Sanctions in the financial services sector.
Sally has over ten years’ experience covering AML, regulatory sanctions, accounting and fraud investigation. Sally is an Assistant Director in …
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RiskShield from INFORM assesses the potential for claim fraud at first notice of loss, medical billing fraud, and performs risk assessment within insurance application data. Finally, working with our customer’s internal management systems, RiskShield can optimize the entire claims process from start to finish allowing clean applications, bills, and claims to flow smoothly and quickly through the system ultimately providing positive customer service.
With a predictive approach, RiskShield incorporates time proven methods such as fuzzy logic, pattern recognition, business rules, and the use of both internal & external data sources to score claims quickly and effectively resulting in valuable insights of fraudulent behavior. Sounds complex to maintain, but RiskShield’s rules can actually be created, tested, verified, and deployed in real-time by fraud specialists of insurance companies themselves without any vendor support, IT support, or system downtime.
Overseeing our core processes, RiskShield’s Business Intelligence dashboard can be configured to analyze active alerts & key performance indicators to uncover hidden patterns or unusual behavior ultimately maximizing our customer’s fraud detection performance and minimizing the number of false positives. Canned & ad-hoc report management can then provide reports as desired by our customers.
RiskShield is used in more than 25 insurance companies currently in Europe and North America, protecting some of the world’s largest insurers, including AXA, GEICO, and Zurich with many of our customers experiencing ROI return rates up to 7:1 per annum.
For more information, call us at 949-293-2793 or send an email at firstname.lastname@example.org.
MetLife, Inc. is a leading global provider of insurance, annuities and employee benefit programs, serving customers in nearly 50 countries.
About Ernst & Young LLP
Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority — no matter what the industry sector is. With over 4,500 fraud investigation and dispute professionals around the world, we can assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. We work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.