One important lesson learned following a long career in the SIU is that insurance fraud doesn’t stay in one place. Trends that originate in California will eventually migrate over to the East Coast or vice versa. Corrupt practitioners from Florida move north to Kentucky and replicate their schemes there. If SIU leadership assumes that fraud affecting their organization will remain static in terms of techniques and perpetrators, they’ll likely be taken by surprise.
Knowledge starts with a strong network
The good news for SIU leadership is that they’re not alone. The National Insurance Crime Bureau (NICB) acts as a liaison between insurance carriers and law enforcement. This means that they can convey information on the latest fraud trends from federal investigators to insurance investigators, allowing insurers to get the inside track.
What’s more, the NICB facilitates connections across the insurance industry. This means that investigators from different companies can safely share information about emerging fraud trends – without violating privacy or confidentiality requirements. This kind of cross-corporate intelligence can be invaluable.
Lastly, the NICB encompasses both state and regional meetings. This lets insurers understand the hyper-local fraud trends that might be affecting their organizations. The higher-level NICB might not yet be aware of, or may not be strongly publicizing, trends that take place on a more local level. Therefore, it’s important to be engaged with insurers that are close by.
Learn the signs of emerging fraud trends
Having a strong local network is a great way to detect and mitigate fraud – but it’s not the only way. You may still be building your network, or your company might be the focus of a completely new trend. In these cases, you need to be alert for signs that fraud is affecting your organization. What should you look out for?
Abnormal spikes in claims
Oftentimes, the first indication of fraud will be a spike in claims volume, either for a specific type of loss or in a very specific area. This could indicate that a fraud network has been able to exploit a loophole in your claims processing workflows that will result in automatic payment for a specific type of claim.
“Pill mills” as seen during the height of the opioid epidemic are an archetypical example of this indicator. Bad actors learned that insurers would automatically pay claims related to opioid prescriptions without much scrutiny, and so they enlisted providers to prescribe opioids to anyone who asked for them. This created a massive spike in PIP and injury claims.
Sometimes these spikes are just unfortunate coincidences, so the important thing to look for is who’s generating the claims. Oftentimes, a new business will come into town – a doctor’s office, an auto mechanic, or a personal injury firm – and immediately begin generating a high volume of claims. This is a very large red flag.
Look for outliers
The problem with looking for a spike in claims is that detection is retroactive – if the spike represents fraudulent activity, then the fraud has already taken place. The best way to catch a spike is before it peaks.
One way to do this is to look for an increase in claims that were previously considered unusual. Here’s a real-life anecdote: an increase in dog-related claims. An insurer discovered a suspicious increase in claims related to injuries from dogs: getting bitten by dogs, tripping over dog beds, sprained ankles when walking dogs, etc.
What happened was that someone discovered that the insurer wouldn’t strongly scrutinize dog-related claims. Their mistake was sharing this information with their neighbors. The fraud was shut down when the insurer discovered that most of the dog-related claims were coming from the same apartment complex.
Talk to your adjusters
Your claims adjusters can be one of your most valuable sources of information. That’s because they have a combination of experience and local knowledge which provides keen insight into emerging fraud trends. If a new provider comes into town and begins generating waves of claims, if a formerly rare kind of claim begins to spike, your claims adjusters are your eyes and ears.
Unfortunately, there is another thing you may need to look out for – compromised adjusters. In certain cases, a fraud network will pay a claims adjuster to hand information about an insurance organization, allowing them to look for loopholes. Alternatively, the adjuster might be an active link in the insurance fraud network. If you notice an adjuster with a much higher payment level, or an adjuster who often reassigns claims to themselves and pays them, this might indicate that one of your adjusters has turned rogue.
Invest in solutions
SIU leaders need to maintain strong professional relationships to spot emerging fraud trends. Leadership must stay vigilant for emerging signs of fraud, and also stay curious – always remaining current on new developments.
With this being said, remaining engaged is always a struggle – and you shouldn’t have to do it alone. Shift Technology provides AI-powered solutions specialized to detect insurance fraud. With tools like Shift Claims Fraud Detection, you’ll be able to detect fraud with greater accuracy, clarity, and speed, helping you stay abreast of emerging fraud trends that elude traditional methods of detection.
For more information on Shift Technology and the insurance fraud detection tools we offer, sign up for a demo today.