AI Can Help Insurers Spot Fraud Attempts

Ronan Burke – CEO and Co-Founder of Inscribe www.inscribe.ai, takes a look at how AI can help detect potential fraud.

For decades, the insurance industry has relied on manual document processing to onboard customers and review claims. When documents are submitted to insurance carriers, they are typically reviewed manually to confirm they are an acceptable form of evidence, they belong to the correct person, they corroborate the correct information, and don’t contain any evidence of tampering.

It’s no surprise that low-level fraud occurs every day within the insurance industry. While the digitization of information has made organizing these files a much more seamless process, it does not affect the detection of illegitimate claims and policies. A cleverly Photoshopped document or a fabricated identity document purchased online could result in yet another case of insurance fraud—which, in turn, causes the industry to lose billions of dollars a year.

According to the Coalition Against Insurance Fraud, low-level fraud claims cause U.S. consumers to lose $80 billion annually. The FBI reports that $40 billion of these costs are from non-health insurance types. For example, auto insurers alone lose $29 billion per year to illegitimate rates and injury reports.

Why do these numbers matter? It may not seem like it, but rising cases of insurance fraud affect the average U.S. family in large ways. The monetary losses due to fraudsters in this sector are causing policy rates to increase significantly. According to the report, U.S. families will have to pay an additional $400 to $700 in premiums.

Photo by Anete Lusina from Pexels

On the insurance industry’s side, companies still employing manual processing strategies are hiring more workers to track this fraud. It is a tedious process for employees to check hundreds of documents a day. As a result, queues are overflowing with applications and claims from customers who desperately need both answers and compensation. Productivity declines and corrupted files fall between the cracks. It is exhausting and expensive for both parties involved.

Fraudsters within come in all shapes and sizes. Combating these crimes through traditional tracking strategies has proven to be a difficult task. It takes more than just the human eye to identify fraud and recognize the patterns fraudsters apply when manipulating documents.

The insurance industry needs to address these challenges in order to remain competitive and detect more fraud, more efficiently. That’s where artificial intelligence (AI) comes in.

Why Insurance Companies Care About Automated Document Processing

Automated document processing is in its early stages of use within the insurance industry. In contrast to manual document processing, artificial intelligence is used to classify, scan, and verify records without a single human involved. As this technology becomes more advanced, businesses are beginning to take advantage of its benefits. Automated processing saves employees’ time, reduces the risk of human error, and detects fraud patterns more efficiently with every use.

Customers like to ask us how this technology works. The first thing that we do at Inscribe is a bit of pre-processing with our machinery. As we show our AI more examples of specific types of records (invoices, payslips, etc.), it quickly learns the nuances between them. After this supervised learning stage, it can label each document with ease.

After labeling, the machinery begins to extract information out of these records. It checks names, addresses, and dates. This process allows the technology to take notice of anomalies across datasets. For example, if an insurance company receives a doctor’s report written in an unusual format, our machinery can identify deviations and take a closer look.

PHOTOSHOP LEAVES A TRAIL

In our experience, we see many fraudsters using tools like Adobe Photoshop to modify the information on their policies and claims. When they do this, they are leaving behind a lot of cookie crumbs that our machine learning models are very good at flagging for fraud. Companies using manual document processes may not catch these deviations.

In addition to a higher accuracy rate, automated document processing can help insurance companies create a better customer service experience. When a customer makes a claim against an insurance policy, it usually takes weeks for a provider to respond, and this is because they are performing the traditional document processes.

With the use of AI, customers do not need to wait eight weeks for an insurance company to pay out. Providers can make decisions more quickly and effectively without worrying about their queues overflowing with applications. It is a win-win for both parties involved.

How AI Supercharges Manual Review Teams

We are aware of the insurance industry’s hesitance to replace its traditional claims processing strategies. I think one of the most significant difficulties of moving towards an automated future is explainability; the fear of artificial intelligence comes from not being able to explain what it is or what it looks like. One explanation cannot solve our culture’s hesitance to use this technology. However, it is essential to note that artificial intelligence is not one huge piece of machinery that does it all. Like an office of employees, our machine learning models can be split up to perform their own smaller functions.

At Inscribe, we have 10 to 12 different models working together to achieve the same goals. Each machine has its own individual purpose and can pick up different features and characteristics of datasets. While our artificial intelligence may not necessarily pick up the nuanced characteristics of a cat or dog yet, it is becoming more advanced every day. We constantly check for biases and audit our systems to ensure that they are making positive progress.

The idea of moving towards a totally automated future is daunting. But implementing AI-powered document processing can help reduce manual reviews by 54%. And I believe that raising awareness around the benefits of artificial intelligence will help insurance providers identify it as a superpower rather than a mystery.

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About alastair walker 10158 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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