If your mother is like mine, she has counseled many times, "Never assume." A classically trained opera singer and quite proper in every way, my mother never offered the rest of the well known expression that explains why so succinctly.
With insurance fraud, the industry for years has been in the uncomfortable position of accepting anecdotal figures to weigh against their impact on the bottom line. While there is no way to nail down exact data with current practices, the most expert minds in the industry have a high level of comfort with the numbers. Today, however, assumptions are less and less comfortable to live with as economic pressures tighten.
No matter what the actual statistics are, there is certainty in one thought—compensation fraudulently obtained is unacceptable. However, investigations cannot be financially prohibitive. The good news is that every day new technological advances allow more accurate identification of questionable claims and eventual fraud discovery. Whether through predictive analytics, social networking sites, or myriad other means, new mechanisms have allowed substantial gains to be made, and most important, cost effectively.
In December 2010, insurance carriers will be required to be in full compliance with the Red Flag provisions of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). FACTA addresses a range of issues related to the use of private data by creditors and the financial services industry. The Red Flags Rule requires businesses, including insurance carriers, to implement a written Identity Theft Prevention Program containing four principal components:
- Identification of activity that may signal fraud is afoot
- Ongoing detection of red flags that have been identified
- Ability to respond effectively to red flags to prevent and mitigate theft
- Periodic review and updating of red flags and procedures to keep pace with emerging threats.
Once in place, the program will warrant that your executive team has an intense colloquy at critical milestones. Emerging technologies will continue to play an increasing role in identification and cost savings where fraud investigations are concerned, and your team will consistently need to strategize on implementation of new procedures.
They say nothing is constant but change, and wisdom dictates that every carrier review on frequent basis its red flags, procedures, use of technology and data, and adjust accordingly. For career fraudsters, you can bet this is a continual practice. That's one assumption that is safe to make.
Until next time...
Bevrlee J. Lips
Publisher/Editor
