Tips to build your insurance fraud strategy
Technology offers some of the most comprehensive methods to prevent insurance fraud, with the use of data analytics, artificial intelligence and automation playing a huge role in fraud prevention. However, there are initiatives that your insurance organisation can consider implementing in the short term as part of your overall counter-fraud strategy through your people and processes:
1. Adopt an enterprise-wide approach
Any goals, metrics and initiatives to prevent fraud should be communicated and implemented across your entire organisation to optimise the use of expertise and technology as well as encourage knowledge sharing. Lack of education or communication can leave your organisation open to be exploited by a single fraud scheme in multiple transactions, as some departments could be unaware of their modus operandi.
2. Educate your entire organisation
It is important to educate employees at all levels of the organisation about fraud schemes, red flags, and preventive measures. Regular training programs can help create a culture of vigilance and equip employees to identify and report suspicious activities.
3. Establish clear policies and procedures
These policies and procedures should address fraud across all areas, including risk assessment, underwriting, claims handling, sales handling, and agent management guidelines. Regular review and updates are necessary to address emerging fraud risks and industry best practices.
4. Implement strong internal controls
Activities such as segregation of duties, peer review, and checks and balances, can help mitigate fraud risks. Regular audits and independent reviews should be conducted to ensure compliance with internal controls and identify potential gaps.
5. Do your due diligence
Conducting thorough due diligence on policyholders, claimants, and business partners can help identify suspicious activities or red flags. This involves verifying identities, checking backgrounds, and performing risk assessments based on credible data sources. Strict Know Your Customer (KYC) and Know Your Business (KYB) procedures should also be implemented.
6. Assemble your experts
Establishing dedicated Special Investigation Units (SIUs) within the organisation can help handle complex fraud investigations. These units should consist of experienced investigators with fraud detection and analysis expertise and be provided with proper training and resources to support their work.
By carefully considering each of the steps above and making sound technology and data choices, your organisation can establish a powerful strategy and structure to combat fraud in every aspect of your operations.