Using IT to catch the false claimants.

(From Insurance Day)

em>New technological developments are offering to resolve two of the biggest headaches in insurance reducing fraud and improving customer service in one fell swoop. The key lies in providing experts' insights into fraud combined with advanced analytics to customer service staff. MARCEL HOLSHEIMER, president and founder of DataDistilleries, explains how this vision can become a reality

INSTITUTIONAL fraud departments have long been at the cutting edge of the insurance industry. Staffed by detectives who go to great lengths to examine claims, fraud detection is a painstaking process, yet it does not always deliver the bottom-line results senior management might expect: Loss adjuster Crawford estimated that for 2001, fraud cost the industry GBP2bn ($3.2bn).

And most institutions have established service guidelines that determine how promptly claims should be settled. These measures, however laudable, restrict the insurance company's ability to perform a thorough identification of fraud within tightening timescales.

There is no denying insurers are overstretched: pulled between the need for thoroughness in investigation on the one hand, and improving customer service on the other.

I believe technology can come to the rescue here. Real-time analytical systems can help insurance companies uncover two to three times as many instances of fraud while enabling them to hand the first line of fraud detection over to the people who do it best the branch and call-centre teams who speak to customers every day.

Such a strategy, if implemented correctly, can vastly enhance fraud detection, as well as customer relations and does not require vast investments in infrastructure or headcount. Here is a brief outline of the ingredients of such an "intelligent" claims-handling process.