Insurance fraud is as old as the insurance industry itself. Efforts to combat fraudulent insurance schemes can be traced back to the Middle Ages, but the menace still persists centuries later. In the property/casualty market alone, WNS DecisionPoint finds that up to 1 in 10 claims is fraudulent, and the costs are quickly piling up. Fraud costs U.S. insurers an estimated $80 billion annually, according to the Coalition Against Insurance Fraud (CAIF).
Inevitably, those costs are passed on to policyholders. The costs associated with combating fraud add between $400 to $700 to U.S. families’ annual premiums, the FBI reports. Advanced technology will be essential to getting a handle on the problem, but for insurers to achieve true protection, the industry must work diligently to overcome key technical and organizational obstacles to success. Most importantly, insurers will need to step up their investments in artificial intelligence.