INSURANCE FRAUD
The total cost of insurance fraud (non-health insurance) alone in the US is estimated to be more than $40 billion per year. That means Insurance
Fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums.
Source: FBI Reports and Publications
How Fraud was
Affecting a LATAM Insurer
Key Figures About
Insurance Fraud Worldwide
Insurance Fraud Has a Worldwide Impact.
Let’s Check Some (Curious) Facts.
Data in 2014:
60
$2.5
Issued Policies
Registered
Premiums
Collected
million
LATAM Country
billion
>760
$1.2
Claims
Processed
Claims
Indemnities
Thousand
Provides a compensatory
PIP Insurance for every
automotive owner
Oversees a Consortium
of 79 insurers on a joint
liability basis
billion
On an European level, costs amount to at
least 2% of all premiums paid
Insurance fraud steals USD$ 80 billion
annually in the US market, which represents
the 2nd largest crime in America
The Association of British Insurers calculated
that fraudulent claims cost the insurance
industry about £1.6 billion a year
The Insurer
In the Netherlands fraudulent claims account
for about 900 million a year
© WeDo Technologies
Limited auditing capabilities
Reactionary model
(by sample analysis)
(only act after it happens)
India’s health insurance sector is losing around
INR10 billion on false claims every year
With that Money you could:
The client experienced high
levels of attempted fraud
3,000+
80%
Build 290,000 new homes
claims cases
per day
High fraud
department costs
Unstructured
claim data
In Australia, up to 10 percent of insurance
premiums paid are lost to fraud
Fund cancer research in America for the next 13 years
Pay all personal income taxes for 7.4 million
americans for 1 year
(time and resource
wasting)
Client's Approach to
Fraud Management: Reactionary
The key motive to all insurance
crimes is financial profit.
© WeDo Technologies
Implementation of a Fraud Management System
Opportunistic fraud
WeDo’s proposal was highlighted by 2 key factors:
“A dose of prevention
is worth a pound of cure.”
Professional fraud
Usually commited by an individual
who simply has a chance to inflate a
claim or get an exaggerated estimate
for losses or repairs to his or her
insurance company.
Often inflicted by organized groups
with multiple, false identities,
targeting multiple organizations or
brands.
An end-to-end fraud control
solution – RAID FMS
A flexible and customized approach to
restructure the client’s fraud
management strategy
that allowed a continuous and automated
monitoring in internal processes
Key Motive & Types of Fraud
WeDo’s Value Added Proposal
20.5%
© WeDo Technologies
21.2%
The Solution – RAID FMS features:
Premium
Fraud Data Management
Application
Rules & Analytics Model
Alert Generation
& Management
Consolidate large amounts of
data from multiple sources and
systems
17.4%
Employee related
Development of around 30
fixed and automatic rules plus
15 random rules for casuistic
cases in order to achieve an
accurate fraudulent risk
measurement
27.3%
13.6%
Claims
Vendor related, third
party fraud
Case Management
Real-time prioritized notifications
revealing fraudulent patterns and
the respective automated
assignment to the responsible user
Set of tools that connects
analysts and decision-makers
in a configurable workflow for
a proper case evaluation
Fraud Risk Exposure Faced by Insurance Companies
The Preventive Approach
© WeDo Technologies
Vehicle insurance
Prevent fraud losses
Inflate claims basis bogus
documentation
Lower loss-adjustment
expenses
Travel insurance
Travel abroad for surgey without
disclosing it
Shop keeper insurance
Claim refund of travel insurance
premium post the trip
Increase the ability to
detect fraudulent activity
Inflate claim in collusion with the
surveyor
Develop a fraud risk
monitoring strategy
Most Common Claims-Related Fraud Scenarios
Business Benefits
© WeDo Technologies
50%
THE IMPACT
Claims
WeDo’s updated methodology completely revolutionized
the client’s fraud management program.
27%
Areas That Should Be Stringent by Fraud Managers
The fraud department redesigned
their internal processes to create a
more dynamic and resourceful
workflow
$1
million
Decrease Costs
Automated fraud detection
processes and controls allowed
managers to supervise more
efficiently, with continuous
auditing tools
23% Premium
Application
Savings
Insurance frauds increases cost by:
Fraud department costs were
decreased significantly, saving
in average USD$ 1 million in
monthly expenses
>5%
>3% and <5%
1% to 3%
<1%
27%
27%
27%
18%
The impact was
“loud and clear”
$20
LO$$
million
RAID FMS helped fraud managers
to detect, analyze and manage
more than 7,000 fraud attempts
last year, which helped them to
avoid almost USD$20 million in
fraud indemnity losses
Preventive alerts, to help avoid
financial losses and wasted time
Insurance Fraud is Impacting the Insurer Costs
SOURCES: Coalition Against Insurance Fraud | EY Fraud in Insurance on Rise Survey | National Insurance Crime Bureau (NICB)
KPMG Advisory Insurance Practice | SAS Combating Insurance Claim Fraud.
© WeDo Technologies
"Thief" icon by Designvad, "Thief Mask" icon by André Renault, "Happy" icon by Tina Abi Hachem from the Noun Project.
Why Insurers Need to Adapt Fast to Fraud Management?
Insurance companies still address the
problem with limited or manual tools:
more than half of the insurers use
manual red flags as a means to detect
fraud in their organizations.
Too distracted or just
reluctant to invest?
Insurers often operate with
multiple data systems, making
easier to resourceful fraudsters
breach their radars.
Organized crime rings are growing,
and so is the sophistication and
velocity of their attacks. The internet
anonymity is enabling the professional
criminals to hide and shift identities
and relationships. This easy and
profitable way to earn money is
capturing attentions.
WHY WEDO TECHNOLOGIES?
WeDo Technologies, a worldwide leader in Enterprise Business
Assurance, provides software and expert consulting, to accurately
analyze large quantities of data from across organizations. WeDo
strives to avoid or minimize operational and business inefficiencies
and helps businesses achieve significant return on investment via
revenue protection and efficient budgeting.
WeDo Technologies’ Revenue Assurance software and services,
also called Profit Protection or Loss Prevention and Fraud
Management, have earned them international recognition as market
leaders and constant innovators.
WeDo Technologies works with some of the world’s leading blue
chip companies in retail, energy and finance, and, through a large
team of almost 500 highly-skilled professionals, more than 180
telecommunications operators from 90+ countries utilize WeDo’s
Technologies.
Sonae Group, WeDo Technologies’ shareholder, is the largest private
non-financial employer in Portugal, with around 40,000 employees
and presence in over 60 countries.
ON THE WEB
www.wedotechnologies.com/en/insurance
GENERAL INFORMATION
[email protected]
www.wedotechnologies.com
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