The most common method to combat fraud is to form rules, checks, and validations. The rules may have certain input parameters and a defined outcome to indicate possible fraudulent activity and alert the claims adjustor. Such rules are incorporated in the IT portion of the claims management system and are managed through hard coding.
For example, input parameters can be the date of loss, date of death, policy status (active/canceled), number of documents required, type of documents, claim amount, bill amount, and others. Based on these input parameters,
the claims adjustor could be sent an alert or the manager could initiate an inquiry. Post-inquiry, if the adjustor is convinced, the claim can be approved and further processing can be initiated.
Sounds simple, right? However, this traditional approach of hard-coded systems has its drawbacks and is not an ideal way for you to keep an eye on fraud. Some of the common limitations of these traditional systems are:
Insurers, like you, must leverage the right kind of technology to prevent and detect fraud in a seamless manner. Technologies, such as a business rules management system (BRMS) and predictive analytics, can be used to identify fraudulent activity and prevent it before it even happens. These tools and an increase in the availability of data, can provide real-time insights, empowering you to minimize fraud by leveraging two approaches.
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