From staged accidents to bogus billing, personal injury protection (PIP) fraud is big business for the ethically challenged, costing consumers billions each year in the form of higher premiums, pricier health coverage and lost wages. Additionally, schemed payouts put lives at risk with unnecessary medical procedures, arson and fake auto accidents.
Because it's so pervasive and too often goes undetected, it's difficult to determine the true cost of PIP fraud specifically, but the Coalition Against Insurance Fraud estimates $80 billion as the annual price tag on insurance fraud across the board, a large chunk of which is PIP deception. That's enough money to pay the personal income taxes for 7.4 million U.S. citizens for a year, build 69 stealth bombers or fund all cancer research in the United States for 13 years. Sobering stats like these are listed on the Coalition's website to help put the figure into perspective.
With so much at stake and anti-fraud legislation often mired in political debate at the state and national levels, insurers are recognizing the need to take more responsibility into their own hands. Finding evidence to reveal collusion and fraud is a driving force in the industry and shapes everything from the hiring process to organizational structure. Beefed-up special investigation units (SIUs), stronger training for claims adjusters and better fraud detection systems are all significant line items that chew into bottom lines, however.
Thankfully, innovative technologies exist that harness the power of the Internet and existing databases so that desktops can become a primary weapon, saving both precious time and resources. Today's modern analytics and predictive modeling—in their infancy just a decade ago—can give companies the upper hand in a fight that for too long has seen them outgunned and outnumbered in every way. Now, with the right software and proper integration of it, insurers stand a better chance of hitting the trifecta of PIP fraud as it relates to them: detecting, investigating and deterring.
What follows is a "best of" list with data sources and technologies that are turning desktops into true detection devices, helping to maximize resources, improve identification accuracy and discover (and deter) fraud rings.
Data-Fill
Heralding a new, more efficient day in the way claims information is gathered and suspect information is flagged, data-fill solutions top the list because of their potential to positively affect everything from customer experience to investigations. This is because data-fill solutions (or pre-fills, as they're also known) allow representatives to quickly complete, or fill in, claims applications. The best options provide extensive nationwide data through interactive tools that populate a call-center rep's screen. Such ready information offers an array of virtually real-time advantages, including the ability to verify that the person calling is the actual claimant and the ability to get ID and policy information for the claimant as well as anyone else involved in the accident. In addition to saving time and improving the customer experience, data-fill solutions raise early red flags, which can help expedite an investigation.
With the most robust data-fill applications, benefits multiply as the claim progresses. At each sequence, more information is automated and added without having to revisit what was already entered, and a comprehensive picture begins to take shape. Routine information, such as a vehicle identification number or a plate number, can ultimately turn into the key piece of a fraud puzzle. New to the landscape, data-fill options promise to become a pivotal element in the way information is managed and investigations are kick-started. Companies serious about improving efficiency as well as fraud investigations would be wise to seek out a robust data-fill solution.
Contributory Carrier Databases
Because fraudsters' schemes are seemingly infinite and often employ multiple tricks for one heist, investigative technologies need to offer dovetailed approaches for searches. The best ones do this by isolating and prioritizing information from exhaustive databases of information that cover all things related to public record.
To uncover the shady claimant with dual coverage or posing as an insured, claims representatives and adjusters need applications that can quickly reveal carrier information. Those that draw from a contributory database of policy records can best detect fraud indicators about claimants as well as other individuals involved in an accident.
Likewise, software solutions that uncover feigned injuries resulting in lost wage claims are another exceptionally useful tool. If it's discovered that Mr. X—who says he's too hurt to work and must be compensated while he recovers—is actually working, his lost-time claim can be retracted, saving a company thousands of dollars.
Public Records Crosscheck
These tools allow investigators to crosscheck public records with businesses and dates of employment. The ability to quickly run an address can uncover interesting results, too, as one investigator discovered when an address turned out to house several businesses, including a medical clinic and a law office. Applications with user-friendly functions can make this happen even faster, saving more money and establishing a carrier as one on the cutting edge of fraud deterrence.
Medical Provider Histories
Similarly, applications that isolate billing to detect unscrupulous medical providers are another arrow in the modern PIP fraud investigation quiver. Again, companies should look for well integrated technologies that pull from an exhaustive data bank and allow investigators to gather and compare information about medical providers, including names, affiliations, addresses, specialties and the various assigned numeric tags like tax identification numbers, unique physician identification numbers and DEA registration numbers. For example, when researching the named medical provider's tax identification number uncovers several other claims, an SIU has stronger evidence that this may be a provider who is a member of a fraud ring or who is acting alone to fraudulently collect. Instead of running off on the proverbial wild goose chase, the investigator now has prioritized and logical information to research before deciding if it's worthwhile to pursue.
Mapping Applications
In what might seem inspired by Hollywood detective shows, mapping applications that search a geographical area via visualization technology are also available and can augment those that ferret out unscrupulous providers. If a provider is red-flagged, investigators can use these applications to import all PIP fraud claims then show virtual map pins for a designated radius around that provider. If a 20-mile radius shows multiple pins, there's more evidence to warrant an investigation into that already red-flagged provider.
Multi-Tasking Applications
Of course, some of the most exciting options available today can perform multiple investigative functions, linking several of the above techniques into one super hero-like desktop resource. One-stop solutions that collect, analyze and leverage large amounts of information and intelligence save resources and time. Law enforcement has taken advantage of these types of tools to track criminals of all walks, which makes these natural choices for carriers interested in bolstering their own fraud departments.
When comparing these multi-tasking applications, companies should look for those that integrate internal real-time data then overlap that data to highlight how individuals, businesses and other entities may be connected. Visual displays, like the GIS mapping application discussed above, can help investigators spot suspicious activity faster. Other visual tools include time-stamped aerial imagery. Additionally, applications that offer multiple formats to display, organize and analyze information significantly expedite an investigation because they can literally connect the dots for detectives.
General Trends
Across the board, an automated fraud detection system that is customizable, flexible and cost effective is key. Many companies built in-house systems or consulted with vendors who created systems for them when analytics and predictive modeling were new. Also, in too many cases, these rely on claims activity and business rules that use data from companies' own data warehouses. As a result, public records that could highlight a financial or criminal motive, such as bankruptcy liens and judgments, go untapped. By accessing only prior claims history, basic rules and in-house data, investigative departments are missing out on a virtual world of information that can help them reveal fraud.
As recently as 1995, investigators and adjusters had to go to courthouses and dig through microfiche at libraries to piece together information. The ability to fire up desktop applications and add third-party information seems light years away from those days, yet too few are yoking investigations to the available.
Insurance fraud may be a costly fact of life, but at no time has the landscape for discovering and deterring it looked more promising. Technology is putting more control in the hands of the good guys and leveling a playing field that for too long has sloped in favor of criminals. Today's anti-fraud departments have real options that save time and money. Instead of taking weeks, leads can potentially be pursued and connected to other actionable information in a matter of days and sometimes hours. In the end, companies that make the best choices will have a competitive advantage in detecting and deterring suspicious claims.