Artificial intelligence (AI) is a rapidly evolving technology that simulates human intelligence with computer systems. Companies across all industries are deploying AI for a wide variety of purposes.
In the world of insurance, carriers are using artificial intelligence to underwrite policies, process claims, and provide customer support. Another key use case for AI and insurance is helping insurers fight back against insurance fraud. Read on to learn about AI’s role in fraud prevention, and what that means for physicians.
Learn more about how Indigo Insurance is disrupting the medical malpractice insurance marketplace by leveraging AI underwriting.
Insurance fraud occurs when a person deliberately deceives an insurance company for personal gain. After tax evasion, insurance fraud is the nation’s second-most-costly type of white collar crime.
In some cases, insurance fraud is as simple as the theft of large amounts of money by organized fraud rings. In other cases, otherwise honest people tell their insurance companies “little white lies” in the hope of reducing their premiums.
Many types of insurance fraud exist. Some of the main types that concern medical malpractice insurers include:
● Application fraud: Application fraud occurs when someone misrepresents or conceals information on their application on purpose. It includes providing inaccurate information about their practice, such as the types of procedures performed. Other times, it includes failing to disclose previous medical malpractice claims.
● Claims fraud: Claims fraud can occur when someone exaggerates the severity of a real claim. It can also occur when someone submits a claim for an incident that never happened.
● Documentation fraud: Documentation fraud occurs when someone alters or falsifies documents. It could include changing the dates on medical documents or making late entries to a patient’s chart.
Insurance companies are vigilant for signs of potential fraud. Some of the common indicators they look out for include:
● Recent policy purchase: Making a claim right after buying a new insurance policy is a red flag. This can cause insurers to look more closely at the circumstances.
● Frequent insurance claims: While some people are just unlucky, those with a history of filing frequent claims may be flagged for possible fraudulent activity.
● Inconsistent statements: Statements that change over time or contradict other reported information could indicate fraud.
Insurance claims fraud doesn’t just affect insurance companies. Fraudulent claims lead to higher costs for honest consumers. This is because insurance companies need to charge higher premiums to offset the high costs of fraud. Overall, insurance fraud costs American consumers an estimated $308.6 billion each year.
Traditionally, insurance companies relied on manual processes to identify fraud. Manual fraud detection involves reviewing each application and claim for red flags that could indicate fraud. Special Investigative Units, also known as fraud units, are tasked with investigating flagged claims.
Recently, insurers have begun using artificial intelligence to enhance their fraud detection capabilities. AI-based fraud detection tools can quickly analyze large amounts of data. With fraud analytics in insurance, insurers can find patterns in the data, identify suspicious circumstances, and uncover potential fraud.
AI-based fraud detection tools offer a number of benefits for the insurance companies using them and for their customers.
With predictive fraud analytics, insurers can monitor claims data in real time. By analyzing patterns, the tools can quickly flag potential fraudulent claims before any damage occurs. The suspicious claims are routed to specialists for further review.
AI fraud detection systems can analyze large amounts of data and identify suspicious patterns, potentially improving the accuracy of fraud detection. AI tools recognize complex activity patterns to help insurers spot fraud that would otherwise go unnoticed, such as schemes involving organized fraud rings.
Fraud costs American consumers billions of dollars every year. By effectively thwarting fraud attempts, AI tools can help reduce the cost of insurance crime. Companies may potentially be able to pass the savings on to consumers in the form of lower premiums.
With more accurate fraud detection, honest policyholders are less likely to have their claims flagged in error. As a result, honest customers experience less friction and receive the help they need faster.
As technology continues to advance, insurance companies will have new ways to fight back against insurance fraud.
Here’s a look at some of the future trends to watch out for:
Machine learning models and AI models are evolving rapidly. As the technology improves, companies may be able to identify sophisticated fraud schemes without the need for human oversight, leading to more efficient fraud detection.
Biometric verification is a security measure that identifies people using their unique characteristics, such as their fingerprints. In the future, companies may use more sophisticated identifiers, such as live facial verification or even patterns in typing speed and mouse movements. Biometrics improve customer identification and may help lower the risk of fraud.
Artificial intelligence may help insurers build more detailed profiles about their customers. Insurance fraud analytics can help insurers identify policyholders who are more likely to commit insurance fraud. They can then put additional requirements and procedures in place, while reducing barriers for honest policyholders.
AI-powered insurance fraud detection is already an efficient process, but as the technology improves, companies may be able to identify more fraud in real-time. By identifying suspicious activity immediately, insurers can prevent fraud before it occurs.
Insurance fraud is a serious crime that costs insurance companies and their customers billions of dollars every year. Advances in artificial intelligence are helping insurers fight back against fraud, allowing them to provide better, more efficient service to their honest policyholders.
Indigo uses artificial intelligence to revolutionize the process of securing medical malpractice insurance. We analyze thousands of real data points to offer pricing and coverage that’s customized to the needs of physicians.
Image by PhonlamaiPhoto from iStock.