3 Reasons Why POCs Are Holding You Back and How to Change That

There are great benefits to Proof of Concepts (POCs). They’re popular and are often looked at as an easy method of comparison between vendors. But are they, really? The downsides of POCs are the hurdles you have to tackle, like a decent budget and proper resources, before you see the benefits. Also, possibly even worse, they can delay you reaching your ROI. To explain this more, I’ve outlined the three major problems with POCs, and an alternative method for choosing the best solution, without these same obstacles. But first, let’s talk about how they’re used.

How Are POCs Used?

We usually see POCs utilized before major tech decisions are made. Carriers will use them to determine which vendors stand out from the rest, similar to the way someone would compare supercars, for example.  The difference is, however, when someone buys a supercar, there are many things to consider, and which one can drive the fastest quarter mile is the deciding factor for only some people. In insurance, though, the test drive tends to focus on one, single component: who can find the most fraud from my historical data set? They’re not focused on handling, fuel consumption, over-the-air updates, maintenance costs, value in 10 years from now, or “the looks”, like buyers of supercars. For many companies, this is, and has been, the deciding factor for a while.  The challenge that then comes from POCs, is ultimately determining what fraud is, in the first place. If a carrier was only looking to identify fraud they’ve seen in the past, they probably wouldn’t be buying a new solution. So, this means investigators get an extra job. They’re now in charge of evaluating POC results. But wouldn’t it make more sense for your company to immediately reap the benefits of new technology instead of looking back at closed claims?  Here are 3 reasons why a POC might not be the best choice. 

1. The Hidden Costs of a POC

Aside from the upfront fee of a POC, the cost of investigations afterward must be budgeted too. From experience, we know that many carriers forget about this initially. They don’t realize the amount of effort it takes to evaluate results, and they sometimes end up spending two or three times the anticipated hours. It’s time-consuming to investigate each vendor separately, but we also know that it’s a crucial part of the POC process. Luckily, claims that have already been flagged as fraud in the past are easy. Your IT department can handle that analysis. But what about these new claims your investigators didn’t catch the first time? We know that they should be re-evaluated, but whose job is it?

How can you maximize your opportunities and reduce fraud at the same time? Download our eBook Insurance Digital Transformation and find out.

2. Integration into Core Systems

Secondly, if your company transitions to straight-through processing to clear up time for investigators, you’d expect to see an increase in efficiency and automation, right? Well, that’s only true if the fraud detection solution is integrated into your current core system. If it’s used as a stand-alone that doesn’t work in real-time, you might find yourself with a solution that nobody even uses in a few months’ time. Claim handlers would need to check the application several times a day and find a way to manually incorporate those results into their daily routine. And because they are already pushed to be more efficient, this is another time-management challenge that everyone can relate to. Remember, integration is key, no matter how “future-proof” your core system may be.

3. Self-Learning Models

Lastly, there’s one more feature we’re forgetting: self-learning models. These are especially relevant for fraud detection software but can’t be evaluated during a POC either. As we know, most fraud detection companies are now using AI in their core technology to keep up with our modern world. But one thing we need to consider is that as fraud evolves, AI models need to evolve with it. They need to learn from human judgment and intervention.  AI needs a human there to tell it whether it incorrectly flagged a claim, so it won’t make that mistake in the future. Yet not all vendors incorporate this into their software. For this reason, during POCs, self-learning models aren’t evaluated. The POC is a frozen moment in time and it's nearly impossible to see the impact of self-learning models without monitoring results regularly. It's even more challenging if a vendor leaves you on your own after implementation too.

Is POC the Right Option for You?

The question all insurance companies should be asking themselves now is this: do I really want to do a POC if so many aspects of the software I’m evaluating are missing?  And unfortunately, a POC can sometimes be a throw-away investment for this reason. Comparing it to a supercar test, in the end, you’ll have results that tell you which car is the fastest, but only on that particular day, and only on a tiny stretch of asphalt. Is that really what you want? We still know nothing about fuel consumption or handling. In insurance, you need to know which vendor is going to be reliable and ready to race in a daily Supercars Championship. So, how do we do that?

Let’s Do a Pilot Instead

In the car industry, we already know how to evaluate. We ask friends or colleagues about their experiences, and we do a test drive. And preferably, not just one, but a few. What if we could do that for even a few months? Wouldn’t that be the ideal situation? For fraud, it’s the same idea. Do a pilot implementation instead. You can try out the solution in real-time for a few months, and if you like it, you subscribe to the SaaS solution. If not, you just pay for the costs of evaluation and setting things up.

But let me say this, you’ll start finding more fraud on the first day of going live with the trial than if you would try to identify fraud in cases you’ve already closed. It’s important that you obtain detailed knowledge about the supercar you want to drive, not just learn a single aspect. If you’re reading this and still considering a POC, I would urge you to go for a pilot instead. Get a feel for the car, the road, the brand, and the people in the garage.

How can you maximize your opportunities and reduce fraud at the same time? Download our eBook Insurance Digital Transformation and find out.