Canadian Underwriter

Fraud detection software a good investment – if claims staff know how to use it

March 7, 2013   by Greg Meckbach, Associate Editor

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Insurance carriers are starting to invest in analytics software to detect fraud, but what’s even more important is having claims staff who are good at using it, educating policy makers and preventing fraudsters from buying policies in the first place, speakers at a recent conference suggested.


“Fraud has gotten more press than it ever has in the 25 years that I have been in the business,” said Karin Ots, senior vice president of regulatory and government relations, claims and customer service operations at Aviva Canada. “I think where we still have to work is we have to educate especially the politicians on things like the Anti-Fraud Task Force.”

Ots, who made her remarks Wednesday at a meeting of the Canadian Insurance Claims Managers’ Association Ontario chapter, was talking about the results of the Auto Insurance Anti-Fraud Task Force, which released its report in November.

Among other things, the task force recommended that the province address the current backlog of mediation cases before the Financial Services Commission of Ontario.

It also recommends that FSCO investigators be allowed to exchange information with investigators from federal organizations such as the Canada Revenue Agency, that FSCO get more powers to investigate and sanction unfair or deceptive acts or practices and that protocols be developed for FSCO to share information on suspicious cases with the Workplace Safety and Insurance Board and Ontario Health Insurance Plan.

The task force also recommended the government ensure that hiring constraints do not delay or prevent the FSCO from acquiring the necessary staff and expertise to carry out additional responsibilities.

“Recommendations do not translate into savings overnight, and that’s where we still have to keep pushing and doing work around, how do we actually take some of these great ideas that we all contribute to, to either put them into legislation or policy?”

Ots suggested to CICMA Ontario chapter members that when Aviva originally set up its anti-fraud investigation unit, it was perceived mainly as a claims issue.

“We recognize now that it really goes beyond claims,” she added. “It’s an anti money laundering issue, it’s an underwriting issue. The best way to deal with fraud is to not let these policies on to the books in the first place.”


Another way of dealing with fraud is to combine computer databases and use software to detect suspicious patterns, Ots suggested.

“It becomes much more powerful when you can aggregate data from different companies,” she said. “We now have eight companies working together representing 61% of Ontario auto market who are going to start pooling the data and then run data and analytics software over it.”

Ots noted Aviva would not actually be able to read other carriers’ claims but the data would be pooled into a system that could generate alerts.

Desjardins General Insurance Group is also using software to detect possible fraud, said Elizabeth Kepes, Desjardins’ section manager for claims and investigations, who also spoke at the CICMA Ontario chapter meeting.

Kepes said Desjardins puts data from Health Claims for Auto Insurance (HCAI) into a database that lets them “identify anomalies” in the data, as well as patterns in services proposed and billed by clinics and health professionals.

“It lets us manipulate the data to see the various clinics the chiropractor is working for or to see the various health professionals registered to a single clinic,” Kepes said.  “There is potential to interface your HCAI data with your own claims data and this might lead you to identify claimants who are traveling an unrealistic distance for treatment, or to see claims that connect a clinic to a law firm.”

Tools of this nature need skilled claims professionals to take full advantage of them, speakers suggested.

“It’s like Canadian Tire coming out with the latest tool that cuts and slices and grates and does all these wonderful things,” said Steve Turner, national manager for RSA Canada’s special investigations unit. “At the end of the day it’s still a tool,” he said. “You still need someone to operate that tool and for me the tool is the adjusters.”

Kepes suggested at Desjardins, a big factor is quality of a carrier’s front line claims staff.


“It’s the adjuster that picks up on human behaviours that raises suspicion,” Kepes said. “They’ll notice that the claimant can’t answer simple questions when they’re reporting the loss. They will notice subtle clues. I’m sure you have heard your claims people say things like, ‘I heard a voice in the background like she was being told what to say’ or ‘his story didn’t make any sense and then when i asked him how many people were in the other car, he hung up on me.'”

Ots said customers and regulators are recognizing the problem of auto fraud and looking to carriers to address it.

“I think we would all be remiss if we thought that external stakeholders do not care about fraud,” she said. “It isn’t just our CEOs or we as claims managers that care about fraud. Our customers care, our regulator cares very much, as well as the government, and if you’ve been following the recent political stuff, it’s quickly becoming an election issue.”

The CICMA Ontario chapter meeting was held at the Ontario Bar Association conference centre, northeast of Toronto’s financial district. The organization holds four meetings per year.