Bank robbers rob banks because, in the words of one such robber, “because that’s where the money is.” Similarly, insurance fraud is a popular activity because insurance companies are in the business of paying out money.
As technology advances, it brings with it both the potential for more fraud and for better tools to discover and prevent that fraud. There is a continual arms race between the insurance companies and the fraudsters. With the internet and information technology, organizations are better able to leverage their data, to reduce risk and insurance litigation, improve profitability and combat fraud.
But there is no room for complacency, as is demonstrated by the discrete breach of Target in 2013, which cost the company millions of dollars and vast amounts of goodwill, and the recent breach of Sony’s internal network and the release of confidential emails, containing everything from catty comments about actors in Hollywood to information on potential projects for the studio.
Other aspects of digital technology present other risks. The prospect for Bitcoin and other digital currencies also carries potential risk for insurance companies and their customers. While the transactions may reduce the risk of consumer fraud for cancelled transactions, it may just move the risk to the other side of the equation.
But information technology provides the potential for better uncovering fraud, especially repetitive or similar financial fraud that may otherwise be unnoticed. By reviewing all claims going to a particular town or parish in Louisiana, unusual patterns can be identified as potentially caused by fraud.
The sheer mass of raw data threatens to overwhelm virtually any business, but by managing that information flow and acting appropriately on the information can help insurance companies avoid become victims of the ever more sophisticated frauds that next year will bring.
Claimsjournal.com, “Technology Dominates Texas-Based Group’s Fraud Predictions for 2015,” December 18, 2014