Insurance Fraud Mitigation Technology: Beyond Red Flags

by Donald Light, March 19, 2007

Abstract

San Francisco, CA, USA March 19, 2007

Celent looks at how technology is giving insurers new tools to fight fraud.

In a new report, , Celent identifies the fraud mitigation strategies available to insurers, and the specific technology solutions that can make those strategies much more effective than the traditional red flags.

The report estimates the amount of addressable fraud, that insurers can actually find and fight. It describes the business value of fraud mitigation technology, and provides examples of leading vendors and solutions. It also identifies fraud mitigation best practices.

Source: Celent analysis

"Celent estimates that the amount of fraud that is actually addressable ranges from 1% to 4% of claims or expenses in the different sectors of the insurance industry," said Donald Light, senior analyst and author of the report.

Light continued, "Fraud identification technology ranges from very simple to very sophisticated. Available technology and tools include: red flags, predictive modeling, neural networks, profiling, claims databases, identity matching, link analysis, and investigation management. A good fraud mitigation program will combine several technologies and methods, using vendor-supplied tools and working with vendor professional services groups."

The 25-page report contains four figures and three tables. A table of contents is available online.

Members of Celent's Property/Casualty Insurance and Life/Health Insurance research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

San Francisco, CA, USA March 19, 2007

Executive Summary 3
Introduction 4
Anatomy of Insurance Fraud 5
How Much Insurance Fraud Is There? 7
Current Fraud Mitigation Strategies 10
Fraud Mitigation Technology 13
Vendors and Solutions 17
The Business Value of Fraud Mitigation Technology 18
Conclusion: Putting It All Together 22
Objectivity and Methodology 24

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