11 1145,wed-hexaware

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Disruptive Technologies to Combat Insurance Fraud June 17, 2015 Presented by Shailendra Deo, Head, Insurance Solutions Group

Transcript of 11 1145,wed-hexaware

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Disruptive Technologies to

Combat Insurance FraudJune 17, 2015

Presented by

Shailendra Deo,

Head, Insurance Solutions Group

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Disclaimer

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content.

Original source for Videos –

— https://www.youtube.com/watch?v=QvsNsWAv-EY

— http://www.cbsnews.com/news/investigators-combing-social-media-to-expose-insurance-

scams/?dbid=562634672845230080&adbpl=tw&adbpr=2340940998&cid=social_20150203_398473870

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UNDETECTED FRAUD

IS ESTIMATED TO COST

INSURANCE COMPANIES

BILLIONS IN WRONGFUL

PAYOUTS.

THE CHALLENGE IS TO

COMPREHEND IT!

$

Insurance Information Institute, USIII estimates that fraud costs $29 billion to P/C lines,

$4.3 – 5.8 billion to auto injury settlements and $95 billion

to Healthcare industry every year

National Insurance Crime Bureau, US

NICB estimates that fraud accounts for 10% of the

property / casualty insurance industry’s incurred losses

every year. This costs $300 / household

Coalition Against Insurance Fraud, US

Fraud costs nearly $80 billion annually to US Insurance

Industry and around $950 per family More than one third

of people hurt in auto accidents exaggerate their injuries

National Health Care Anti-Fraud Association, US

Fraud costs nearly $51 billion annually to US

Healthcare Industry

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NONE OF THE LINES

OF BUSINESS HAVE

BEEN SPARED BY

FRAUDSTERS.

THERE IS THOUGH A

CONCENTRATION IN

SPECIFIC FEW.

Auto - giveup

Auto - padding / false claim

Auto - staged

Auto - underwriting

Business - arson

Business - padding / faking

Disability

Drug diversion

Fraud - general

Homeowners - arson

Homeowners - fake / padding

Insider - agent

Inside - insurer

Liability - false claim

Life insurance

Medical - false claim

Medicare / Medicaid

Underwriting

Workers comp - employer

Workers comp - provider

Workers comp - worker

Auto, Workers Comp and Healthcare Claims are traditional favourites of fraudsters.

They have also started looking at areas like Marine, Travel and Weather Insurance.

2

44

51

21

66

58

96

73

8230

17

39

31

82

109

121

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64

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176

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Few regions in US are favourite to fraudsters

Cities with the

Most staged Accidents

New York

Tampa

Miami

Orlando

Houston

Los Angeles

Chicago

Hialeah, FL

Las Vegas

Glendale, CA

TO

P10

FloridaTexas

LouisianaMost Disaster

Prone States3

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Fraudsters are quick at innovating new ways to deliver results.New patterns evolve while the historical ones are still maturing

Common Interests –

Claimant and Service Providers

Cartoonstock.com

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Increasing

Complexity

of Fraud

LAYERS

of Advanced Analytics

While Investingators are

irreplaceable, technology

can enable faster and

accurate investigation

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Outlier analysis through use of business rules is a common technique to understand patterns and detect fraud

Suspicious claims

from a particular

repair shop

Fraud in new

policies or policies

about to expire

Anomaly

Detection /

Business Rules

0

20

40

60

80

100

Normal Profile

Abnormal*Activity

Measures

*Probable

Intrusion

Anomaly Detection

Average Claims

Paid / Month

Frequency of

claims / per day

Any Problem?

Relatively high false positive rate

Anomalies can just be new normal activities

Anomalies caused by other elements

─ E.g: Large number of claims on weekend, from a specific repair shop

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Predictive Analytics is one of the strong pillars of identifying fraudulent patterns in historical data

Ditching

Past Posting

Misrepresentation

Staged accidents

Vehicle Smuggling

Phantom Vehicles

VIN Switch

Predictive

Analytics WhatHappened? WHY What

Next

BusinessIntelligence

PredictiveAnalytics

Quantifiable ROI

?

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Insurers have started looking at text mining to detect fraud through tweets on social portals and information hidden in some of the claim documents

Tweets that do not

match with the claim

information

False location or timing

of accident (social

media)

Inflated damages

(various reports)

Text Mining

Text Data Mining

Text Data Mining

Text

Mining

Predictive

Coding

Tone

Detection Named

Entity

Extraction

Part of

Speech

Tagging

Topic

Mapping

Traditional

Search

Evolution of topics, Interactions, relationships and emotions over time

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Prefill data update detection can identify fraudulent intentions right at the source itself

Over writing of

prefilled

information on

online portals

Multiple changes to

description of

information

Prefill Data

Update Detection

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Techniques that can bring out hidden relationships through use of internal and external data

Fraud rings

Connections to

known fraudster

Social Network

Analyzer

Confirming true identify

of a person

Identifying relationships

between participants in

multiple claims

Link Analysis

Fraud rings

Duplicate claims

Industry Database

Lookup

Search Match Link Analyze Act

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More and more customers are adopting to usage based insurance. This enables insurers to utilize telematics data to detect fraud at the time of accident

Driving Behaviour

Detection

Event Monitoring

Telematics

Some data capable

of being captured

by telematics

systems

Speed,

Acceleration

Battery

Voltage

Aggressive

Maneuvers

MileageFuel Use

Engine

Health

Location

Breaking

Some data capable of being captured by telematics systems

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Voice Stress Analysis: A game changer to techniques utilized to detect fraudulent claims at the FNOL stage itself

Speech modulation

and voice stress

analysis

Voice-to-text

conversion and

analysis

Voice recognition

Voice Analysis

Comparison of Emotions of Same Person

in 2 Different Situations

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Image & Video Analysis: Disrupting the ways claims executives approve damaged parts and estimate losses

Image morphing

Damaged part

analysis wrt to

accident description

Text recognition

from images

Image & Video

Analysis

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While almost all of the fraud detection

solution providers use one or more of

these technology options, Hexaware’s

iFraudEngine enables fraud detection

utilizing all 10 layers of advance analyticsIncreasing

Complexity

of Fraud Predictive Analytics

Text Mining

Prefill data update detection

Social Network Analyzer

Link Analysis

Industry Database Lookup

Telematics

Voice Analysis

Anomaly Detection / Business Rules

Image & Video Analysis

Fraud Engineii

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Detect underwriting irregularities and suspicious claims

Leverage information from multiple structured & un-structured,

internal and external data sources

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iFraudEngine helped a leading P&C Insurer achieve measurable business benefits

Increased the fraud

detection rate by 2 folds01

Reduced per claim cost by

$250 which led to an annual

saving of $31 Mn

02

Reduced the false positives

to one third which led to

each investigator handling

10 more cases every month

03

Reduced claims and

underwriting leakage thereby

improving profit margins

04

8% claims flagged

as fraudulent

Repair shops from where

lot of low value fraudulent

claims are getting reported

Repair shops from

where lot of low value

fraudulent claims are

getting reported

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Thank You

www.hexaware.com

Questions?

Visit Hexaware Booth # 126 for a Solution DEMO

Email Us – [email protected]