Consider the total cost of P&C insurance fraud, which The Coalition Against Insurance Fraud pegs within the US alone at more than $80B. Within the typical P&C insurer’s claims organization, it’s often business as usual until questions are posed as to why processes are sluggish or why fraudulent claims are slipping through the system. The blame often falls on the claims adjuster and/or the technology being used.
Reducing Costs: A Competitive Disadvantage
A claims unit’s success is measured on response times—the faster the better. The pressure of completing a claim quickly and ensuring an adjuster is paying only what they owe, opens up cracks in the process for fraudsters to slip through. This dynamic makes streamlining claims difficult because claims professionals don’t know which claims to take at face value and which ones need more investigation. Even with new claims management technology, this dynamic still exists. To address this problem, insurers need a way to quickly and consistently understand the merits of the claim and the trustworthiness of those involved.
Pressure mounts as the insurer tries to determine where the cracks (weaknesses) are in technologies, tools and processes.
Laying the Foundation
To avoid these pressures and create cost-effective, efficient claims processing, it’s a good idea to first consider an aspect of claims fraud that’s also often overlooked: the idea that it’s what you don’t know that catches up with you—and your bottom line. So how can you find out what you don’t know?
Many insurers are going through a digital transformation to improve efficiency and streamline claims, but this can’t happen without first knowing who to trust. Regardless of your current core systems and technology platforms, actions can be taken now to empower your claims operations with timely information, that will help them quickly and confidently handle claims. For many this means taking a phased approach and looking for alternative processes that deliver near-immediate results.
Platform Neutral, Fast Results
This stepped approach involves having your data batched, parsed, analyzed and returned to you within a 24-hour period. This analysis (aka the FRISS Score) identifies exceptions, unusual loss-related occurrences, gaps, details or trends that raise flags, giving your claims operations the opportunity to act on the results before the claim is paid. These insights empower claims professionals to triage existing open claims, complete supplemental questionnaires and refocus their efforts on closing “healthy” or legitimate claims more efficiently.
By screening claims in a batch model and taking advantage of the resultant FRISS Score, the cost savings of ditching unnecessary manual reviews will become apparent. Along with that, you will also alleviate extra and unnecessary work for the SIU, and automatic fraud detection, allowing you to take suitable action before the claim is paid.
Is batch processing the last step in claims modernization? Definitely not. Modern core solutions like Duck Creek, Guidewire and others are built with immediacy in mind. Insurers taking advantage of newer releases can benefit from instantaneous insights, including those needed to detect fraud and stop it in its tracks. We encourage this as the final goal, and present a phased approach as an option for those whose systems are not quite ready for the ultimate end-to-end claims processing experience. The difference between a two-second solution and a 24-hour solution might seem vast, but the 24-hour solution is still far better than the antiquated pay-and-chase way of combatting fraud.
The path toward a fully modern core process may be a long one, and McKinsey suggests IT departments are evolving toward a “simplicity first” mindset as they get started. The good news is that insurers considering a modern fraud mitigation solution don’t have to wait for it. The FRISS Score is immediately available to you now as a service, regardless of your platform or the claims management technologies you currently employ. Wherever you are on your digital journey, modern fraud detection is yours for the asking.
Using the right tools and batch processes, you will be able to process and pay claims faster, improve customer service, and create lifetime customer loyalty. We’d like you to think of this as a win/win in your strategy to reduce costs, become more efficient and improve fraud detection and risk mitigation.
What Exactly is the FRISS Score?
The FRISS Score is a system that applies expert rules, profiles, predictive models, text mining and link analysis. All this available information is extracted from more than 100 external data sources, correlating to your data, to provide you with an accurate estimation of the fraud and risks in your book of business. This estimation results in a risk score (the FRISS Score). The higher the score, the higher the potential risk of fraud. As a proven standard, the FRISS Score enables better decisions for each quotation, policy or claim.