Written by Shaina Carlebach
Why are false claims dangerous for insurance companies?
Fraud and false claims are rampant in today’s digital age, posing significant risks to businesses. The Coalition Against Insurance Fraud (CAIF) has come out with a new study that shows the full extent of insurance fraud in the United States. According to the CAIF, total losses due to insurance fraud across the country are $308 billion. The sad reality is that these losses will create significant repercussions for the average insurance buyer. It will lead to increased premiums, inflated costs for applicants and many will not be able to afford insurance in the future.
Which areas of insurance are affected by fraud?
All areas of insurance are affected by fraud. People buy various insurance policies for different purposes:
- Life Insurance
- Car Insurance
- Property insurance
- Health care insurance
- Unemployment insurance
Let’s look at how false claims can come into play in each of these policies.
Life insurance
Usually, people will not falsify life insurance claims as it would necessitate faking a critical illness or even death. However, applicants will misrepresent personal information such as their income, assets, or health to get a lower premium.
Car insurance
To increase their benefits from car insurance policies, people could make false or exaggerated claims such as claiming damages for a vehicle or claiming falsely for medical injuries that were “caused” in an accident.
Property insurance
To receive a payout for damaged property, people can exaggerate or make false claims and even stage scenarios such as arson. They use fire to destroy items purposefully as it destroys evidence that would prove it was staged which is done to increase the value of the claim or to get money for damaged items that would otherwise not be sold.
Health care insurance
Applicants for health insurance may hide pre-existing health conditions on their applications or mispresent their state of health to receive health care benefits.
Unemployment Insurance
People may sometimes fabricate their unemployment status or claim falsely stating that they were unemployed for extensive periods of time.
When does insurance fraud occur?
Insurance fraud can occur during the three main stages in the customer lifecycle:
- During the application stage, insurance agents might repurchase a new insurance policy known as fee churning or the customer might provide false information to pay lower premiums.
- The customer can create a false exaggerated claim when needing to file a claim.
- When insurance agents collect the premiums and fail to pay the company for the policy intended for the client.
How are companies protecting themselves from fraud?
To tackle fraud and false claims, nine in ten businesses plan to increase their spending on identity verification (IDV) technology. Verifying the authenticity of claims made by individuals and ensuring that they align with established standards or regulations is essential to prevent fraud. Validating claims is both an integral and vital cornerstone in the management of claimant cases. Yet each step of the process is labor intensive, time consuming and often affected by human error. Insurance companies are looking for solutions to mitigate risk and minimize the high costs associated with fraudulent claims.
Is there a way to streamline the investigation process?
One of the biggest challenges that insurance companies face is to provide an expeditious onboarding experience for customers. Their objective is to sign up customers quickly, however they are held back by the long-drawn-out process of validating who the person is, and what their claims are. This process can deter new and existing customers.
To maintain customer satisfaction, it is vital that insurance companies quickly uncover fraudulent claims, by streamlining their processes and finding a way to detect fraud rapidly. Uncovering fraudulent claims effectively and reliably will help facilitate the expedition of claim approval for honest claimants rapidly.
Automated scalable solutions will enhance customer satisfaction
An automated solution that will detect human deception on a large scale will reduce the cost of manual expensive labor and to focus on which claims are susceptible to fraud. This will allow insurance companies to streamline their investigation processes and minimize their investigation resources.
By accurately validating any statement or disclaimer efficiently, Validit.ai provides a reliable and cost-effective solution to optimize the validation process. Years of professional real world integrity assessment experience have been implemented into this trusted solution which deploys proprietary AI and machine learning algorithms to recognize deceptive behavior. By utilizing a unique combination of physiological monitoring, cognitive stress analysis and artificial intelligence, Validit.ai has created highly accurate, fully automated, patented technology to safeguard the operations of any organization and protect it from fraud. The solution is based on a unique assessment methodology that reveals profound insights into human intent in real time allowing insurance companies to mitigate risk promptly.
Validit.ai has already proven successful in achieving the following:
- Saves over 80% in claim approval time significantly thus improving customer satisfaction.
- Over 89% completion rate proving high engagement of clients.
- Saves over 50% of expenses per claim.
Streamline your processes and uncover fraudulent claims effectively and reliably.
Validit.ai helps insurance companies to quickly sort insurance claims based on the probability of fraud, replacing the slow and expensive process currently used and uncovers fraudulent claims effectively and reliably. The cost of manual expensive labor is reduced via the streamlining of investigation processes. This process creates foundations of trust for insurance companies to scale their businesses thus improving their metrics substantially.
