7 Effective Tips to Stop Insurance Claim Fraud

In 1995, insurance fraud losses totaled $80 billion in the USA, in 2023 it was found to be $308.6 billion! This increase is partly due to technological advances, which provide fraudsters with new channels which they can exploit. In this article, we go through seven tips you can use to reduce insurance fraud in your business.

Understanding the Scope of Insurance Claim Fraud

Fraud affects all insurance sectors. But, according to Forbes, the top three affected are:

1. Medicare and Medicaid insurance: $105 billion annually
2. Life insurance: $74.7 billion yearly
3. Property and casualty insurance: $45 billion per year

All of this adds up to show that between 10% and 20% of all insurance claims are fraudulent, posing a massive challenge to insurers and consumers.

For insurers, checking for fraud can slow claims processes and cut profits. This profit loss forces companies to raise premiums. For customers, a slow claims process is frustrating. It reduces their trust and loyalty to their insurance company. Also, sadly, they are the victims of insurance fraud schemes, with 35-44-year-olds being the most common victims.

The Impact of Online Fraud

As businesses move online, fraudsters have new ways to commit fraud. This fraud can be done manually, by impersonating insurance customers or repeating claims many times. Or hackers can even set up bots to automate it, this means that they can scale fraud schemes quickly. 

7 Ways to Reduce Insurance Claim Fraud

It can seem like an impossible challenge. But it is possible to cut down on insurance fraud and detect it better.

Tip 1: Digitize the Claims Process

Moving online has increased fraud. But, it also speeds up the process and improves your data's accuracy. This fact highlights the importance of choosing a secure system. It keeps your clients' sensitive information safe. Now, you can focus on improving your claims and reducing fraud.

It improves your claims process, as all your information is stored together in one place. Since the recording is done online, the quality is better. As you can easily see your information, you can quickly analyze patterns and reduce fraud.

Tip 2: Continuous Training and Education for Claims Teams

Training all claims teams about insurance fraud tactics is important. They must also learn new techniques to combat fraud. This knowledge shouldn't focus only on the fraud department. All analysts who work with claims should be able to recognize claims fraud, so they can flag it.

Tip 3: Company-Wide Awareness and Vigilance Against Fraudulent Claims

As well as fully training your claims teams, you should also provide some general training for the whole company to prevent fraud. As well as insurance fraud, corporate fraud also affects businesses. According to the ACFE's 2020 Report to the Nations, organizations lose an average of five percent of their annual revenue to fraud every year. All employees should be aware of the signs of fraud so that they can recognize and report it.

Tip 4: Utilizing Predictive Analytics in Insurance Fraud Detection

Using predictive analytics is one of the most effective ways to detect insurance fraud. To use it, you need to use a fraud detection model to analyze your database. This model can be trained with machine learning using your data, so it learns what has been flagged as a fraudulent claim in the past. When it’s been validated you can implement your model across your company. By using predictive analytics, you speed up the claims fraud detection process and save employees’ time. Your employees only need to get involved after your model has analyzed and marked the claim as potentially fraudulent.

Tip 5: Strengthening Inter-Departmental Collaboration

Promoting teams working together and increasing transparency will make it more likely that people will flag fraud and ask for help. Increasing collaboration will increase trust and openness between everyone in the organization. As a whole, you will become better at fighting insurance claims fraud.

Tip 6: Attending Conferences for Latest Insurance Industry Insights

Going to conferences is important for networking and for personal growth. As well as that, they can also teach you new techniques to spot insurance fraud. You can also learn about new patterns and studies that people in your industry have done. It’s important to go to find out more and then present your key learnings to your colleagues who couldn’t attend. By presenting what you learned, you keep it clearer in your mind, and you share knowledge as well.

Tip 7: Embracing Advanced Software Solutions

Using software can help you find fraudulent claims better. It also lets you spend less time sifting through huge amounts of data. 

Using n2uitive you tap into an innovative solution for the whole recorded statement lifecycle. It is a secure system, with security equivalent to banks. With n2uitive, you can record, review, store, share, and analyze all your recorded statements with ease and security. Having all your statements in one place is also helpful. Recording statements with an advanced app helps too. Together, these steps let you prevent insurance fraud more efficiently.

How Does Claims Management Software Prevent Insurance Claim Fraud?

Claims management software harnesses AI and other technologies to help adjusters. They can flag potentially fraudulent claims that you can then investigate in more depth. Their predictive analytics are also a powerful tool to identify patterns in fraudulent insurance claims. By harnessing digital tools you save time, improve accuracy, and data quality. 

How n2uitive Reduces Insurance Fraud

At n2uitive, we focus on time-saving, accuracy, and better data. Our unique recording statement management tool makes adjusters 30% faster. It also improves the accuracy and quality of your recorded statements in our solution. We also integrate seamlessly with Guidewire Claims Center to improve security and data accuracy.

Set up a call to learn more about how we can help you prevent fraud with our solution.