Insurance fraud in U.S. a $30-billion problem: Deloitte

Property and casualty insurers need to adopt a multi-pronged approach to combat a growing fraud problem in the United States, notes a recent report from Deloitte.

The report, A Call to Action: Identifying Strategies to Win the War Against Insurance Claims Fraud, says auto insurance and workers’ compensation are the two biggest sources of an estimated $30 million in insurance fraud.

Deloitte also states the National Insurance Crime Bureau (NICB) reported that in 2011 questionable claims for the first time had exceeded 100,000 referrals and had increased by 19% compared to 2009, and specific categories saw even larger increases, such as casualty and miscellaneous claim types.

To deal with claims fraud, Deloitte recommends insurers to create an integrated fraud management strategy that rests upon four pillars. Its four pillars of an integrated fraud management program include:

• developing a fraud management strategy;
• aligning the operating model;
• improving information quality; and
• leveraging advanced technology tools and analytics.

“While many insurers have invested resources in an effort to improve fraud management, few have taken a broad or integrated approach,” Deloitte observes in the report. “Some companies have invested in improving data quality and adopting technology tools, but still lack the business processes, workforce competencies and organizational structure needed to act on the insights gained from data analysis.”