1. society
2. crime
3. property crime
4. fraud

How to Effectively Fight
Insurance Fraud
Insurers — facing continued uncertainty about
profitability, pressure on pricing and low interest
rates on their fixed-income investments – are
focusing on ways to control costs and improve
overall risk management. Fraud control is an
area with strong potential for increasing insurers’
profitability. According to a recent Accenture survey
conducted among property and casualty insurers,
over the last three years 71% of respondents
experienced an average increase of 10% in the
number of fraudulent claims processed.1
1
2
Key findings from the Accenture 2013
Europe and Latin America Claims Survey
Accenture conducted a quantitative
survey among 48 property and
casualty (P&C) insurers in Europe
and Latin America from December
2012 to March 2013. Face-to-face
interviews were carried out with
C-level executives involved in
the claims function,most of them
heads of claims departments or
the equivalent.
Sixty-seven percent of insurers
participating in the survey had net
premiums written (NPW) in excess of
€1 billion, while 63 percent had overall
individual-lines premium income of
€1 billion or more. Survey respondents
were from the following countries:
Austria, Belgium, Brazil, Chile, Colombia,
Denmark, Finland, France, Germany, Italy,
Netherlands, Norway, Spain, Sweden,
Switzerland and the United Kingdom.
Key findings
Accenture’s survey highlighted
respondents’ concerns about the
modernity and flexibility of their claims
systems. Among their main priorities is a
desire to reduce overall claims loss costs
and improve customers’ claims experience.
Yet, among their major challenges is
meeting customers’ rising expectations
and regaining their trust.
On the technology front, insurer
respondents face a number of critical IT
challenges in meeting strategic priorities,
including: supporting multi-channel
access with core applications; integrating
new layers of technology; managing
unstructured data; and handling complex
claims using existing core applications.
Among survey respondents,
fraud prevention is a top
priority over the next
three years
As mentioned earlier, fraud is a growing
concern for P&C insurer respondents with
seven in ten indicating they have seen an
increase in fraudulent claims over the past
three years. However, respondents are slow
to implement initiatives considered to be
the most significant in improving fraud
detection, namely improved support from
IT, improved data collection and the use of
fraud modeling techniques. (See Figure 1.)
While the average increase in fraudulent
claims over the last three years is 10
percent, the increase varies significantly
across countries and carriers.
Yet, there are simple responses to the
issue. According to the surveyed insurers,
better fraud detection capabilities could
help shave 5 percent of their claims costs.
The challenge for insurers is improving
their detection and prevention capabilities
without adversely affecting the processing
of legitimate claims.
This also brings to the forefront the need
to address legacy technology issues and
inefficient processes that can hinder the
detection of fraudulent claims. Survey
respondents see an attractive opportunity
for investing in claims fraud analytics and
other anti-fraud solutions.
Respondents also believe the most
important initiatives for strengthening
their anti-fraud capabilities would be to
use fraud modeling techniques (52 percent
claim this is critical), improve the collection
of both internal and external data (37
percent), and obtain greater support from
IT (31 percent). Looking ahead, the major
focus is on organizational restructuring,
training and process improvement to help
strengthen fraud detection. However, the
priority over the short to medium term
is to use fraud modeling techniques (76
percent), improve IT support (67 percent)
and improve data collection (61 percent).
Figure 1. Key Initiatives Implemented to Improve Fraud Detection
Which initiatives to improve fraud detection are already implemented in your
company? Which ones would you like to initiate over the next 3 years?
Organization restructuring
Training to improve employee skills
73%
15%
Process changes
36%
Enhanced control mechanisms
Overall improvement in customer service
36%
27%
Improved data collection (internal and external)
Improved support from IT
Use of fraud modeling techniques to detect fraud
Currently used
3
70%
30%
Plan to over the next 3 years
21%
55%
42%
36%
24%
61%
61%
67%
76%
Optimizing fraud detection by using a
combined approach
Industry experience indicates
that an effective fraud detection
program can yield benefits
including savings in the range
of one to three percent of total
claims paid out (depending upon
the maturity level of the policy).
These possible savings can be
generated through a combined
approach that:
1) Provides better service levels
and more efficient claims
processing to generate positive
customer feedback, helping
increase customer loyalty and
deterring individual episodes of
fraud; and
2) Uses advanced analytics tools
for greater focus in detecting and
fighting fraud. Proven strategies
can help insurance companies
address fraud, from simple
individual incidents to complex,
organized cases of multiple fraud.
These include:
Using business rules to
detect irregularities
Undertaking network
analysis
Business rules can allow for the
identification of anomalies or
irregularities during the processing of
claims. Such rules, for example, compare
claims based on various types of fraud
(individual or organized fraud), and
determine whether to have the personnel
in charge investigate the fraudulent
incidents, and if so, when. Companies also
have access to sophisticated analytics
tools to detect such irregularities, allowing
insurers to save money, time and effort.
Analyzing the relationship that exists
between concerned parties can
help specialized investigators detect
organized insurance fraud. Technological
developments in this area can help
investigators in their efforts to link
different players. These new technology
solutions can help identify the extent of
the relationships between the investigated
parties, and the information and insights
gleaned can be used to define indicators
that point to possible fraudulent activity.
Employing predictive
modeling
Closing the loop and
intervening
Predictive analytics methods and
models can be used to review historical
fraudulent claims and identify factors and
elements that can help prevent future
fraud. The goal is to detect potential
fraud as early as possible in the claims
process and thus reduce payments made to
fraudsters. Although it is not new to fraud
prevention, when combined with other
analytical tools as part of a concerted
global effort, predictive modeling can be
highly effective.
These fraud detection strategies –
including the integration of fraud
indicators within the claims handling
process – can work in combination to
increase the overall effectiveness of fraud
prevention. When a risk is identified,
immediate action can be taken, including
investigation by a team of specialists,
interaction with the claims management
unit and the insured.
4
Working with Accenture’s Service Center
to help fight fraud
Accenture can help insurance
companies develop a claims
analytics platform that uses a
common infrastructure, scaled
horizontally and that includes a
broad range of models, including
those for addressing injury,
subrogation, litigation and large
loss claims. These solutions
can help insurers create value
and improve their return on
investment.
• Achieving greater statistical certainty
in cases of suspected fraud through
improved data analysis using current
analytical models
Fraud analytics is a critical
component of an effective fraud
management strategy where
deterrence and control are as
important as detection and where
the combination of a vital role
for human / soft skills as well as
technology, is crucial.
• Increasing business productivity as
data analysis is now at the heart of
fraud detection. Insurers are turning to
predictive analysis for several reasons,
including:
Accenture’s managed analytics
service is highly effective at
fraud detection, but can also be
expanded to address other
claims issues.
The broad use of analytics and
statistical tools and methods, along
with improved productivity in
managing claims and a reduction in
payments for fraudulent claims, can
help insurers generate important
cost reductions.
Insurers seeking to combat fraud
can also benefit from:
• Reducing the manual effort needed in
analyzing data and devoting more time
to value adding reporting
• Reducing the number of fraudulent
claims managed by optimizing the
validation of claims process and through
improved process effectiveness delivered
by more robust analytics tools and
models.
- The advanced capabilities of these
tools and their predictive methods
- The availability of data for decision
making purposes
- Analytics’ support in helping grow their
business in a slowing market
Accenture works with many insurers to
help them optimize their fraud detection
processes and to help improve the
enterprise’s return on investment in
fighting fraud. The Accenture Analytics
Innovation Center provides access to the
skills, expertise, leading-edge thinking,
techniques and tools that can help
enhance fraud detection capabilities,
as a managed service.
As a first step in our approach, we
complete an assessment of existing
fraud detection capabilities and then
prepare a pilot project to demonstrate
the feasibility of the enhanced fraud
detection process. We then proceed with
its implementation (Figure 2).
Accenture’s approach can provide many
advantages to clients in their efforts to
fight fraud in addition to helping deliver
real benefits and tangible results.
- Predictive analytics’ ability to improve
the quality of customer service and
reduce the costs associated with
opportunistic fraud
Figure 2. Accenture Approach to Fraud Detection
Assessment and preparation of the
pilot (managed locally)
• Evaluates your capabilities in
terms of: process, organization,
model and data
• Identifies the “quick wins” and
formalizes the business case
• Identifies data necessary for
the pilot and validates the scope
(Lines of Business)
Implementation of the pilot in a
Managed Services mode through
the Analytics Innovation Center
• Implements a pilot with support
of Accenture Analytics Innovation
Center - focused on identifying
“quick wins”
• Benefits from Accenture’s
business rules and other techniques
• Avails the Accenture Claims
Analytics Record (CAR) fraud model
• Creates a link with the Fraud
Claim processes in order to help
limit the losses (“stop loss” process)
5
Figure 3. Advantages, Real Benefits and Tangible Results
Advantages
Real benefits
Tangible results
• Does not require a significant
investment on the part of the client
(no additional costs for the software
and hardware, no installation costs
and training) as the platform is
provided by Accenture
• Can increase the number of
fraudulent claims managed
• Can produce greater statistical
certainty in the case of suspected
fraud
• Have access to experienced data
processing professionals as part of
the fraud detection action steps
• Can increase your organization’s
fraud detection rate
• Can increase your fraud
avoidance and recovery rates
• Can result in a reduction of
fraudulent claims
• Can deliver more efficient fraud
checks and audits
• Can help generate positive and
quick return on investment (<1 year)
The growing constraints and demands on
insurers’ capital and profitability
can make the fight against fraud
an unavoidable issue that needs to
be addressed.
In addition to the advantages, benefits
and results for insurers mentioned above,
more robust fraud protection capabilities
can also help in a number of other areas:
• Protecting the company’s reputation
and image
• Reducing the enterprise’s overall capital
and operational costs
• Can result in a reduction in
manual effort to conduct data
analysis
• Can help improve the efficiency
of the vendor network
The use of advanced analytical techniques
appears to be an important tool to help
insurers reduce cost and improve their
performance. According to an Accenture
Insurance Equity Analyst Survey, 79% of
respondents believe that over the next
three years, “data analytics” will be one
of the most important value drivers
for insurers.2
Working with clients across the globe on
insurance fraud assignments, Accenture
and its Analytics Innovation Center are
dedicated to fighting insurance fraud and
responding effectively to the challenges
and demands of this business imperative.
• Increasing speed of implementation
• Flexible and scalable solution, with
improved computing capacity
• Improved and innovative predictive
modeling skills to fight fraud
6
References
1 Accenture 2013 Europe and Latin America
Claims Survey. Published June 2013.
2 Accenture Insurance Equity Analyst
Survey – Outperforming the market in
uncertain times. Published September 2012.
Contacts
Eva Dewor - Head of Global
Insurance Risk Management
[email protected]
Tel. +49 89 93081 68602
Mobile: +49 175 57 68602
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Insurance Management Consulting
[email protected]
Tel. +33 153 23 55 06
Mobile: +33 6 03 68 74 12
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[email protected]
Mobile: +32 499 865047
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[email protected]
Tel. +39 065 9566847
Mobile: +39 335 7496703
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[email protected]
Mobile: +39 328 3903251
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Mobile: +44 07803 987173
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