Insurance companies are increasingly making use of digitization, but fraud detection projects are often put off. There is much to be said against that.
Digital transformation and fraud prevention
Insurance companies around the world have one priority: digital transformation. This often requires doing away with existing processes and automation systems and setting up a completely new way of working and infrastructure. A gigantic enterprise that calls for a huge investment, in people as well as in money. One that makes great demands on the organization as well.
Quite understandably, yet another project is not welcomed with open arms. Nevertheless, I want to advocate that companies (also) set about tackling fraud detection sooner rather than later.
All parties agree that fraud detection is important. Combating and preventing fraud is a high priority for all insurance companies.
Why do insurers accept the substantial losses caused by fraud and put off tackling the issue?
The following arguments are often used:
- No time: we need all our people, time and money for our new core system. We have our hands full and really can’t cope with yet another project. First we need to finish the new core system and then we will see.
- No redoing work: we are not going to add anything to our existing, outdated system. Soon our new system will be ready and then we will have to start all over again with all the integrations.
In fact, this is the reality
We would like to show how things can be done differently (and are often being done so already):
A fraud detection project hardly takes any extra time.
the suppliers do most of the work. In practice a project will take around four to five months and only a handful of employees are involved for a couple of hours a week at the most. Moreover, these employees are usually front office staff that is not directly involved in the transformation projects. They are really keen to commence the reduction of fraud, as they have to deal with dubious applications and claims every day. Moreover, as soon as the software goes live the investment immediately starts to repay itself. There are plenty of examples where the investment has repaid itself twice over within seven months.
Transferring fraud detection does not require redoing any work.
On the contrary, it can easily be transferred to the new system. It is actually just a matter of ‘replugging’: the system itself is maintained and can be integrated without problems into the workflow of the new system. Better still: start to think about the place of fraud detection in the process before the core system goes live. That makes the transition even simpler.
The suppliers of core systems are also aware of the importance of preventing fraudulent claims from accidently being paid out and they are busy incorporating standard connectors in fraud detention solutions.
Straight through processing (STP) is not possible without automated fraud recognition.
Everyone has set their sights on straight through processing as objective within the new processes and systems. This means that human intervention is no longer needed in both the acceptation process of clients and the processing of claims. So, the human eye and intuition are also abandoned, and with it fraud recognition is lost. This will most likely result in an increase in the number of unduly paid out fraudulent claims. In fact, STP is not possible without automated fraud recognition unless we are willing to accept misuse.
Putting off: penny wise, pound foolish!
In other words, commencing automated fraud detection does not require much time, people or money and it immediately produces significant results. We can support this based on our own experience with numerous projects. 95% of our projects meet their deadline and stay within budget. We have many examples of projects to back up the three points above. I am happy to discuss this with you: email@example.com.