Prevent insurance fraud with technology
Humans try to make sure that their future stays safe. The objective of insurance is to support financially against unpredictable life occurrences such as accidents, illness, or even death. In return, the person needs to pay a small amount regularly. A customer buys an insurance policy she makes monthly payments, called premiums.
Insurance companies pay an amount after the maturity of an insurance policy, the amount provided to the customer, based on the policy statement known as claim amount. This amount is provided to the beneficiary, nominee, policyholder, or legal hired.
Steps for policy claims are simple: the policy owner needs to connect with the broker, he will investigate to evaluate damage and review policy then arrange payments.
The insurance industry has seen many frauds for the claim amount. And insurance fraud seems like it might be easy to attempt. For example, hide insured property, file a missing report in the police station to claim an insurance amount.
The tracking of the fake insurance claim is complicated if there is no proper evaluation system.
Here are some types of common frauds seen by insurance companies:
1. False claim
It is the insurance claim for the accident that never happened and the situation that never occurred. This type of fraud is hard to identify. It is impossible to prove or disprove where it is difficult to collect evidence. Insurance companies have seen that some policy owners break the insured property intentionally to claim the amount. After getting the amount, several customers either inexpensively repair the property or never make any changes.
2. Faked death
You have seen in movies and television that this kind of fraud is common. A person applies for a large amount of insurance, becomes a policy owner, and then fake her death. The insurance beneficiary then applies for the payout. When beneficiaries get the payout, they vanish with the generous amount with them. Until the time when insurance companies understood the fraud, it’s too late. Sometimes the fraud person can be found or never get caught.
3. Disaster fraud
Some people look at natural calamities as a problem, while others look at them as an opportunity. The opportunity to fake an insurance claim for the amount is also known as opportunistic fraud. The chaos that happens during the disaster is not easy to handle for businesses. The natural casualty gives a perfect time to the fraud claim. The insurance businesses cannot find a particular solution to check whether the damage claim is real or not.
4. Exaggerated claims fraud
It is a type of fraud seen when the property or goods damaged or stolen is of a lesser amount than the claim amount. Policy owners claim for the damage that happens with the insured property. The amount they claim from an insurance company is higher than the actual need. It is difficult to analyze every damage and approve a claim. Sometimes it takes a little longer. Genuine customers face trouble due to the increasing number of frauds.
These are some of the fraud categories done by the policyholders. The list is long, and fraud happens in many ways. These frauds occur due to the unavailability of data management and an instant claim assessment system.
Technology helps insurers with fraud management.
Data sorting technology:
Technology empowers insurers with such advancement that divides the data into multiple understandable formats. The internal and external data sorting is complicated for an insurance business. Artificial intelligence, machine learning, and blockchain divide the content properly.
When someone submits a policy application, the insurer needs to verify their profile. It helps to check whether an applicant is eligible for it or not. Underwriting evaluates the risks involved in insuring people and assets.
The technologies like the Internet of Things (IoT) and drones help the insurer to collect data. An insurer can collect data from other platforms like Social media, webinars, virtual conferences, chatbots, and telematics. It is difficult to collect and sort data. Technology helps to manage data resources.
When someone claims property damage, it is difficult for the insurance provider to check the property damage and analyze it. The drone can help insurers locate those areas where humans cannot go. Some policy covers risks against fire, flood, earthquake, lightning, explosion, inundation, storm, riot and strike. These are risky areas for humans to visit technology made them easily accessible.
The IoT has now become part of everyday life for humans. People use such devices equipped with sensors and automatic-activation functions. Including both work and leisure in practically all areas of their life. Cars, smart homes, smart devices, digital health trackers all help to collect real-time data.
The data collected through digital devices help to analyze whether someone is creating a false claim. Insurtech companies benefited from fraud identification as companies equipped with technology. The data collection, data sorting, highlighting key areas help the insurer to make the right decisions.
Humans are good at finding the loophole of the system. The human brain is better at adapting with new technological updates and coming up with new ideas. Same way human react technology also keep updating and identify human behaviour. Artificial intelligence, machine learning technologies learn and adapt to the changes. These technologies are getting better day by day. It will help identify fraud in a relatively easy manner.
Insurtech companies are getting better at fraud management as technology is making their life easy.