COMMON AUTO-INSURANCE AND HEALTH INSURANCE FRAUDS AND THE WAYS OF ADDRESSING THEM

by NEC India NEC is a leader in the integration of IT and netwo

One of the necessities for people is getting health insurance, given the rising healthcare costs. All of us are also supposed to get vehicles insured by law. In the blog, we will discuss the various ways in which policyholders try to commit fraud. 

 

 

Fraudulent means used by policyholders 

 

Buyers of insurance policies try to exploit an insurance contract by fraudulent means. The following techniques are quite commonly used. 

 

· Quote a higher claim 

 

Exaggeration of claims is the most typical method to receive more money from the insurance company. Health insurance companies can also fall victim to exaggeration of claims. Since many people believe that they will not get the full amount of the claim, they quote a higher claim. Other claim frauds include submission of duplicate medical bills, overstating the expenses incurred for health care services, false accidental injury claims, filing a claim for a fictitious treatment and forging medical documents. Because of the mounting losses being faced by health insurance companies, finding a solution for health insurance claim fraud has become a relevant issue for them.  

 

 

· Claims padding 

 

Claims padding is one of the most common tactics used by fraudsters to make exaggerated claims. In this, they resort to adding damages, injuries and fictitious passengers to insurance claims. Another very common method to get claims is accident-staging. Innocent people on the road become the target of unruly elements who want to get insurance claims. Reporting that a vehicle has been stolen while it has been whisked off to an unknown place by the owner is also a trick being adopted to get an insurance claim. Insurers need to protect themselves from such fraud, which is getting common. Because of the hefty payouts, they have to face heavy losses. Auto-insurance fraud detection and prediction are necessary for finding a solution to all these fraudulent practices. 

 

· Frauds committed unknowingly 

 

Health policyholders tend to commit fraud knowingly or unknowingly. By far, the most common type of fraud is eligibility fraud. It happens because the insurance holder makes a health claim for an illness that is not covered in the insurance contract. An applicant may not disclose a pre-existing disease or mistakenly enter an incorrect date of birth. As this is considered application fraud, it results in a rejection of a claim. Application and eligibility frauds may be unintentional in nature. 

 

 

How can insurance companies deal with fraud? 

 

In most cases, the policyholders are able to get the claims because it is not easy to detect fraud. Since insurance companies are getting scammed by fraudulent vehicle claims, they are looking for auto-insurance fraud detection techniques and ways to make a prediction about them as a solution.

 

· Relying on Artificial Intelligence  

 

 

Detection of fraud is becoming challenging for the insurance sector. Most health insurance and vehicle insurance companies are relying on cutting-edge edge technologies to nail the frauds effectively. Data science, artificial intelligence and machine learning are being used by them. 

 

For fraud detection in vehicle claims, an analysis is made of false claims by data scientists. This can help in the automation of the usual manual claims review process. An AI model is then developed for insurance claims fraud detection. The AI model is able to give a fraud score to a claim that has arrived for processing. Fraud-flagged claims are then sent to fraud analysts. Insurance agents can reduce the number of wrongly paid claims and increase the profits of an auto insurance firm. Advances in technology have made auto-insurance fraud detection and prediction possible as a solution to the increasing number of fraudulent claims.

 

· Big Data techniques 

 

To prevent fraudulent health claims, Big Data techniques like Machine Learning and Predictive Analytics are being widely used. Predictive Models are used to calculate the probability that a claim is invalid based on the historical data and the behavior of specific customers. Predictive analytics can be used to identify patterns and trends to predict fraudulent claims. Advanced machine learning is used to create customized health insurance fraud detection platforms that can do real-time monitoring of claims. 

 

· IT auditing techniques 

 

As a solution for the increasing number of health insurance claim fraud cases, IT auditing is being used. Since the amount of data that needs to be perused for detecting fraudulent claims are vast, IT-auditing techniques like Data Mining are used. Among the thousands of claims that have to be processed, Data Mining can help in identifying claims or claimants that can be classified as deceptive. 

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Created on Dec 8th 2022 23:28. Viewed 200 times.

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