FICO has announced the availability of a new solution aimed at helping insurers curb the growing problem of insurance claims fraud. The FICO Claims Fraud Solution uses three integrated technologies to identify more fraudulent insurance claims faster, in order to help insurers cut general insurance fraud losses that last year reached an estimated $52bn worldwide, according to research and advisory firm Celent.
Challenging economic conditions have pushed many kinds of insurance fraud, such as auto claims fraud, to new highs in markets worldwide. In the US, insurance fraud accounts for an estimated 10-20% of insurance premiums; that number climbs as high as 25-30% in other markets, such as Brazil. A single scheme uncovered by the FBI in February 2012 racked up an estimated $279m in losses. In the UK, the Association of British Insurers(ABI) says insurance fraud costs an estimated £2bn per year.
The FICO Claims Fraud solution provides a powerful integrated set of three fraud fighting technologies to catch more fraud. Predictive models based on neural networks, modelled after the human brain, identify potential fraud either at the point of sale or at first notice of loss, so that insurers can catch fraud before the claim is paid. The results are prioritised so that investigation actions are more efficient, focusing most on those claims most likely to be fraud.
Fraud investigators can use FICO’s business rules management system, to identify suspicious claims that match known fraud schemes. With the solution’s link analysis capabilities, fraud investigators can scour claims data to find previously undetected fraud based on connections to confirmed fraud cases found by the business rules or FICO analytics. This technique is particularly useful for uncovering fraud rings, such as “cash for crash” auto fraud schemes where criminals cause collisions with innocent drivers in order to file fraudulent whiplash and other claims. The combination of predictive analytics, link analysis and business rules finds up to 50% more fraud over a rules-based system alone.
“Personal lines and commercial lines claims deserve the same vigilance that insurers are already applying to healthcare insurance fraud, waste and abuse,” said Russ Schreiber, vp and insurance practice leader at FICO. “FICO has been the leader in analytics-based fraud detection over the last 20 years, and we’re applying our advanced analytic approach to give personal lines insurers the most powerful protection on the market.”
In addition to the FICO Claims Fraud Solution, FICO offers the FICO Insurance Fraud Manager system for insurance fraud, waste and abuse. The company’s FICO Falcon Fraud Manager system protects more than 2 billion payment cards worldwide.
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