Insurance Fraud Prevention Measures
According to the results of sociological research, 10% of insurance payments are received by fraudsters, and half of Russian citizens do not consider deception of an insurance company an offense. Although insurance is not only one of the spheres of business, but also a mechanism for solving social problems. Therefore, insurance fraud harms the insurance business, the interests of individual citizens and the entire state.
The prevention of fraud in the insurance industry will be effective when using an interactive (dialogue) approach that provides for the phased implementation of the goals. First, the insurance company is diagnosed to identify the risks of fraud and calculate the approximate amount of financial losses. Then a set of measures is developed to prevent, identify, and investigate identified incidents of insurance fraud.
To determine the risks of fraud, a matrix is formed that describes the methods of scams, based on the activities of competitors and the specifics of the insurance business and the offered insurance programs. Such a matrix makes it possible to form an exhaustive list of the types of fraud inherent in a given insurance company, to assess the potential risks of financial losses for each incident.
The second stage includes the development of anti-fraud measures. Such measures are aimed at reducing the number of fraud risks identified at the first stage and include:
- Fraud prevention - tightening the procedure for carrying out pre-insurance expertise, evaluating and selecting partner companies involved in damages.
- Insurance scam detection - implementation of an automated system to detect fraud in insurance claims. Such indicators are introduced into the information system of the insurance company and help to reduce the amount of damage from illegal actions of swindlers. If the system detects fraud, employees conduct additional checks and assess the amount of damage. If the fraud is confirmed, the insured person is denied insurance payments, and, if necessary, the materials are transferred to law enforcement agencies or to court.
- The investigation includes the development of a standard procedure for identifying, collecting evidence and resolving blacklisted insurance fraud incidents. The ideal solution is to create a single database of insurance scammers, which all insurance companies have access to. The automated system for detecting insurance fraud is based on the principles of predictive modeling. This is a method for analyzing information using artificial intelligence and automatic decision-making tools.
Insurance fraud prevention measures depend on the type of insurance. This is due to the specifics of the occurrence of the insured event and the peculiarities of making payments under the policy.
Preventive measures for personal insurance
The insurer in such a contract should be alerted to the doubtfulness of the insurance interest. But the peculiarities of the insurance business do not allow it to be thoroughly checked at the time of the contract, and the employees of the insurance company, who receive a percentage of each agreement, are not interested in checking. But when an insured event occurs, insurers carefully double-check all the circumstances of the incident and, if possible, try to recognize the contract as invalid.
Collecting evidence of the lack of insurable interest is effective in combating scams in property insurance, but it is not suitable for life and health insurance, especially in the event of the death of the insured person or causing grievous bodily harm. A feature of personal insurance is the possibility of concluding a contract with two insurers at the same time. But if the insurers succeed in proving fraud under the personal insurance contract (fictitiousness or illegality of its registration) and the insurance payment is denied, the health of the insured cannot be returned.
To prevent such incidents, employees of insurance companies are obliged to inform clients about the provisions of Articles 934 and 963 of the Civil Code of Russia and criminal liability for policy fraud, as well as about the rapid detection of such acts. But in real life, an insurance employee does not need such explanations. He receives a reward for every insurance contract he signs, so he skips the discussion of the client's liability for fraud, hoping that he can quickly figure out such an incident.
In Western Europe, restrictions on the amount of payments under personal insurance contracts are popular - you can purchase an insurance policy from an agent, through an Internet resource or using a special machine, if the amount of payments does not exceed the established limit. If you want to draw up a contract for a large amount, it is signed only at the office of the insurer when filling out a special questionnaire, which includes questions regarding the state of mental and somatic health, the presence of an insurable interest in the insured person and the beneficiary, execution of life and health insurance contracts in other companies, specifics professional activity, other risk factors, and obtaining an opinion from the doctor of the insurance company about the passage of a medical examination.
Such measures are due to the fact that the interest in fraud increases in proportion to the increase in the amount of insurance payments (under one contract or several with different insurers). And control of the limit amount of payments is a good prevention of insurance scams. The ideal solution for Russian insurers is to limit the amount of insurance payments to five times the amount of the insured citizen's earnings per year.
If an insured event occurs, employees of the insurance company must conduct a thorough analysis of the documents provided when applying for payment. Studying the documentation, conducting an interview with the injured citizen (with a detailed questioning about the circumstances of the accident or a request to state them in writing in the application for insurance payment), sending inquiries to health care institutions at the place of occurrence of the incident allow us to detect contradictions in the specified information and identify a scam. If in doubt about the honesty of the applicant, the insurance company will initiate an independent medical examination.
When registering insurance against temporary disability due to an accident, deductibles are introduced for the prevention of fraud, for which insurance payments for minor incidents are not made. Insured events are limited to days of sick leave or a percentage of the amount paid. If the insurance contract provides for payments according to a special table, it does not include minor injuries or the percentage of payments on them is minimal.
If there is a suspicion of fraud on the part of the client, it is advisable for the insurer to contact the law enforcement agencies or other insurers (perhaps the client has already been convicted of fraud earlier). Joint actions increase the chances of identifying and proving fraudulent activities.
Countering travel insurance scams
Work in this area will be successful if there are reliable counterparties (an international insurance and service company) who have regional offices and who are responsible for resolving disputes on payments. Such requirements are made by the embassies of Western European countries - France, Austria, Germany. Although they are caused not by the prevention of insurance fraud, but by the need for guaranteed provision of medical services to the tourist in the host country.
Small regional companies should not arrange travel insurance on their own. They need to enlist the support of Russian reinsurers or co-insurers, as large insurers have more experience in investigating fraud incidents. Another prerequisite for travel insurance is participation in ensuring the provision of medical services to clients of an assistance company - an independent partner company or a subsidiary (structural) service of the insurer itself (alarm center).
Compensation policies should be excluded when registering travel insurance for visiting countries popular among Russians - Cyprus, Turkey, Greece, Israel. Insurers do not pay attention to the fact that insurance with a guarantee of receiving medical care in the host country becomes compensatory. When prescribing the conditions for the provision of services to tourists, the insurer should proceed from the economically justified limit amount of compensation payments, the excess of which implies the obligatory involvement of assistance companies.
When issuing travel insurance for visiting countries popular with Russian tourists, it is more profitable for the insurer to sign an agreement with a local healthcare institution or private doctors to serve clients. Such a measure guarantees the provision of medical services at a discount and the accuracy of the bills for their payment.
The policy prescribes the obligation of the tourist or the leader of the tour group, in the event of an insured event, to contact the assistance service at the specified phone number or address, which organizes the treatment and transportation of the victim to the health care institution with which the insurer has entered into an agreement.
Reducing the risk of fraud in travel insurance will allow the introduction of deductibles and liability limits of the insurer into the contract for:
- outpatient treatment;
- dental services;
- transportation to a medical facility.
In cooperation with travel agencies acting as agents, the insurer must control the use of reporting forms - accounting for issued, damaged and reissued policies. In order to avoid scams, the damaged forms are transferred by the travel agency to the insurer for writing off. Regular reports from the travel agency are also required, taking into account the seasonality and the number of tourists.
Monitoring of medical records provided by healthcare institutions to confirm expenditures is carried out even when settling issues of payments by a foreign counterparty company.
Preventing health insurance fraud
An insurance policy providing for a client to contact any healthcare institution (and not at the address specified in the contract) is prohibited in Russia, unlike in Western Europe. Russian clients are required to undergo treatment in medical institutions that have entered into partnership agreements with insurers.
When concluding new contracts with medical institutions (especially with small centers or clinics, private practitioners), insurance employees audit internal processes and prescribe reporting conditions in more detail than with proven long-term cooperation clinics.
Insurers practice "covert" checks on prospective partner clinics, when an auditor is sent to a new or "suspicious" clinic under the guise of a patient. In addition to preventing fraudulent activities, such audits help to establish the quality of the provided medical services and the politeness of the personnel of the medical institution.
To reduce the size of payments, insurers refuse to issue VMI insurance for citizens, including programs of secondary medical services (recovery, rehabilitation, physiotherapy), without marking a specific number of visits to a doctor. Such policies are issued only for large companies, when the risks of going to the clinic are distributed among employees. And a citizen, purchasing a VHI insurance policy, seeks to use the program to the maximum.
Insurance employees, whose responsibility is to monitor and analyze medical records for payments, must be experienced professionals capable of identifying potential errors and other deception on the part of doctors and insured persons.
A detailed statistical record of the relationship of the insurance company with medical clinics based on the received documentation and a systematic analysis of indicators from different partner clinics will help to avoid fraud in health insurance.
Prevention of fraud with OSAGO policies
Systematic monitoring of the work of insurance agents, branches of the company and its personnel - all who have the right to access the policy forms - can prevent fraud in OSAGO insurance. Employees of insurance companies become complicit in fraud, selling not the original CMTPL policy with insurance protection, but a piece of paper that protects the client from fines from the traffic police.
Structural divisions are created to control the correctness of calculations by insurance agents of the amount of contributions, fixing the date of signing the contract. To prevent fraud on the part of the client, before calculating the cost of repair work, insurers double-check the car at the service stations with which a partnership agreement has been concluded.
The mechanism of the "red flags"
The red flag system, or predictive modeling, is based on input variables. The quality of the results obtained depends on the ability of artificial intelligence to combine the input information obtained from the insurer's internal sources and external databases.
To calculate the likelihood of situations, insurance companies rely on the following sources of information:
- information about insurers and insured citizens;
- data on damage;
- publicly available databases - demographic information, purchasing power studies;
- information about the conditions of insurance policies and programs;
- data on technical characteristics of the insured vehicles.
The use of predictive modeling accelerates the investigation of insurance policy fraud incidents, increasing the insurer's profit, which is directly dependent on the speed of detecting fraud.
However, the development of predictive modeling in the Russian insurance market is constrained by two factors:
- Lack of a unified information base.
- Low level of audit within insurance companies.
This is due to the desire of the leaders of the insurance market to introduce too many fields for entering information into monitoring and analysis systems. However, the graphs provided in theory in real life remain empty.
The main way to prevent insurance fraud is to enter the information collected during the investigation into a centralized database available to all insurers. Such information bases make it possible to detect and investigate even complex insurance scams, but only if they are publicly available. It is also necessary to comply with the requirements of the legislation on ensuring the security of information constituting a commercial secret. Therefore, in order to solve the problem of deception in insurance, insurers must find legal and effective options for cooperation.