Insurance fraud continues to be a common problem in the industry. Every line of insurance risks fraudulent claims and policies, including health, life, workers’ compensation, and P&C. The latest numbers show insurance fraud costs families between $400 to $700 annually. And on an industry-wide basis, fraud costs consumers and businesses $308.6 billion per year.
Even though these numbers are concerning, there are ways to see through insurance fraud and stop it in its tracks. Agents are one of the first lines of defense against fraud.
Read on to learn ways to spot and stop insurance fraud.
Spot and Stop Insurance Fraud
Insurance fraud is a severe problem. Fraudulent claims, policies, and bills exist across all lines of business, including healthcare, life, disability, workers’ compensation, and P&C. Agents can help spot insurance fraud at both the policy and claim levels, making them an essential part of the fight against fraud.
Here are some proactive steps agents can take in the fight against fraud:
Stay educated on trends.
Like most things, insurance fraud evolves, and criminals become more sophisticated. This means agents and brokers must stay on top of trends and changing red flags to still pick up on fraud. One way to stay current is by focusing some of your annual continuing education hours on courses about fraud red flags and mitigation. Look through the digital offerings of your favorite CE provider to find interesting and up-to-date webinars to teach you more about spotting and stopping fraud. Members of the American Agents Alliance enjoy discounts on their CE courses and other educational offerings.
Talk with your policyholders.
Knowing your clients can help in the fight against fraud. You can identify fraud red flags to investigate further by having conversations and asking clarifying questions. And remember, red flags don’t mean fraud has definitely occurred. They are indicators to look deeper — but a red flag itself doesn’t prove fraud. If you discover more issues when you talk with your policyholders, you can always refer the claim for more investigation. Your carrier partners have SIU departments dedicated to reviewing and fighting fraud.
Rely on technology for help.
Insurtech solutions focus on various aspects of the insurance ecosystem, looking for ways to improve and expedite the process. Fraud is no different. Technology is helping carriers fight fraud through automated red flags, predictive modeling, and data link analysis. Link analysis is a tool that finds meaningful connections between different data points embedded in the various systems and programs insurers use. Agents can work with their carrier partners to understand and embrace this fraud-fighting technology.
Institute sound anti-fraud policies at your agency.
Agents and brokers must recognize and mitigate fraud by policyholders — and other agents and employees at their agency. While employee dishonesty is difficult to consider, agency owners must know that insurance agent fraud is a genuine concern. Consider how policies and procedures can help prevent fraud, like having two individuals review money transfers and new policy inceptions.
Agencies should consider these steps to help fight fraud:
- Train employees often on how to recognize and combat fraud
- Implement policies to reduce the opportunity for employees to commit fraud
- Utilize technology to help, like multifactor authentication and automatic holds for fund transfers
- Lock up any paper checks or other currency if your agency uses checks
- Establish procedures and process owners to manage digital fund transfers and requests for payment
- Ensure your cybersecurity is current and teach employees about social engineering schemes, like phishing emails asking employees to click links, open attachments, or respond with personal details
Learn More Insurance Fraud Prevention Tips From the American Agents Alliance
When you become a member of the American Agents Alliance, you receive immediate access to our network of insurance and risk management professionals across the country. Members also enjoy discounts on CE courses, like those designed to help reduce, prevent, and mitigate insurance fraud.
Become a member today and continue the fight against fraud.