Like
many
business markets
today, the insurance industry is undergoing dramatic changes in the way it does
business. The days of face-to-face dealing with potential and existing
customers are giving way to Internet-based applications and claims processing
that present new and additional cases of fraud. The need to identify the fraud
file and conduct a special investigation on suspicious insurance applications
and claims is essential for protecting rates of the policyholders, and the
bottom line of the insurer, to remain competitive and increase revenues. In
addition, increased insurance department compliance requirements can only be met
with appropriate investigations.
 Self-Insurers and Third Party
Administrators face similar issues, yet they rely on limited available resources
to investigate claims against their principal.
At the same time, competition is tougher than
ever before. Insurance fraud is escalating to unprecedented levels, while some
insurers and self-insurers are pushing their special investigations and related
claims practices and procedures back to the adjuster level without success.
Insurance Fraud
Fraud has been a challenge to the
insurance industry for many years. The threat of fraud is increasing, as new
highly organized fraud groups discover new methods of victimizing insurance
providers. In the United States alone, insurance fraud costs the industry more
than $211 billion each year. That's approximately eight percent of the total
economic crime loss in the US, across industries.
As in all types of fraud, there are two classes of participants:
- Casual fraudsters who take any opportunity
that is presented to them and,
-
Organized fraud groups that present the greatest
danger to any type of business.
In all businesses, fraud migrates to the weakest
victim. It is also attracted to those insurance providers and self-insurers that
are the most competitive and customer service oriented. Whether it is casual or
organized fraud, NFC Global (NFC) has the experience and
expertise to identify vulnerabilities in the insurance provider's or self
insured's business practices that enable fraud to occur. It has a demonstrated
track record of saving millions of dollars for client companies by assisting
them in planning, implementing and managing innovative programs for fraud
prevention and risk management.
Risk Assessments
A preliminary evaluation of an insurance
provider's anti-fraud strategy is a cost-effective benchmark assessment of the
current business practices and fraud exposure. This process includes an
assessment of the applicant screening, underwriting, claims processing,
investigations, reporting compliance, prevention, restitution efforts and
training within the provider's enterprise. Risk is also mitigated by the claims
evaluation, claims denial and referrals to law enforcement in the market. In all
aspects of the insurance business, reasonable risk ratios should be reflected.
NFC can determine these ratios by identifying the fraud possibility in a
geographic area and the best practices needed to reduce those risk ratios.
Goals that are key to a successful insurance antifraud program include:
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Risk evaluations that are weighted
against premium fraud indicators |
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Suspicious fraud claims
identified |
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Suspicious claims denied
through effective investigations |
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Applications and claims fraud denials referred to law enforcement |
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Regulatory compliance |
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Restitution Efforts |
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Education and training |
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A comprehensive prevention
program |
Investigations
NFC's insurance fraud investigators
can assist an insurer's or self-insurer's special investigation effort where the
loss justifies outside expertise, or the investigation reaches beyond domestic
boundaries.
Where it is cost-effective, NFC can act as the provider's out-sourced SIU.
Litigation
Support
Even the most competent investigations require professional litigation
support. NFC can work with the insurance provider and self-insured to
develop all fraud evidence and properly prepare witnesses. NFC defense counsel
is specialized in litigation of fraudulent claims and experienced in criminal
litigation. In addition, the sensitivity and need for recognition of good and
bad faith handling is kept in the forefront. Counsel will draw on the resources
of NFC to gather data to increase the probability of restitution in litigation,
especially on those cases involving fraud rings (lawyers, ethnic groups, auto
repair and medical facilities, etc.). NFC can provide graphic presentations that
will make it easy to “sell” the case to a court.
Regardless of how experienced in-house resources
may be, NFC has insurance consultants that can be utilized to testify as “expert
witnesses” in cases of fraud or insurance practices and procedures in general.
This is also helpful if bad/good faith issues surface. The use of external
expertise often makes the difference between successful and unsuccessful
litigation.
Training
A key
to successful risk management and fraud prevention is always training. NFC’s
insurance experts can provide comprehensive training to sales, underwriting,
finance, claims, SIU, human resources and corporate relations personnel that
will help them recognize critical business practice and fraud prevention issues.
Risk awareness is one of the best defenses against lost revenue and fraud, and
NFC can provide the latest in fraud scams and training
to uncover and prevent fraud.
Due Diligence
Evaluating the complete background of a fraudster or fraud rings, and the
probability of recovering funds via restitution, can assist the insurance
provider and self-insured in determining whether the case is worth pursuing. Due
diligence makes the difference. It is essential when determining whether to
provide insurance to an unknown commercial enterprise or high profile
individual. A provider must always know the risks versus the rewards in today’s
fraud-riddled business atmosphere.
Please
contact us for more
information. |
