Commenting On Current & Past Issues On Insurance Accident Claims Experienced In Malaysia And Its Region & Also Interesting Topics Related To Mankind.
Wednesday, March 14, 2012
Fighting fraud - the FICO way
MALAYSIA'S insurance industry, which has generally experienced a healthy growth rate, is no longer immune to the volatility of the global and domestic financial market.
One of the key and lesser known side effects of such uncertainty is the rising risk of fraud, and criminals who think that they can get away with it.
Sadly, it is the Malaysian consumers who suffer the consequences in the form of higher insurance rates.
Insurance fraud losses are rising in markets across the globe, with insurers experiencing higher incidents of opportunistic fraud as well as premium leakage.
It is said that up 20 per cent of insurance claims have fraudulent elements in them.
To turn the tide, insurers need better fraud detection invoked at the earliest possible moment.
Unfortunately, Malaysian insurers are losing this war, because the technology and practices used to identify insurance fraud lag behind those used in industries that have successfully contained fraud, such as the local banks.
Until the gap is bridged, insurers will struggle to break the vicious cycle.
According to FICO, a leading provider of analytics and decision management technology from the US, insurance fraud is prevalent in high-volume transactions, namely in the motor and healthcare insurance segment.
Under pressure to process and pay claims within specific time frames, insurers are often unable to detect fraud or errors until after a claim has been paid. Then they must expend significant resources trying to recover the payment.
FICO's insurance expert, Scott Horwitz, said the company's analytics solution can help combat insurance fraud more effectively by using predictive analytics to find potential fraud and abuse.
He said the company's solution helps overcome the "pay and chase" syndrome, applying advanced predictive analytics to detect fraud earlier in the process.
At the same time, it speeds up the processing of good claims and helps insurers comply with payment timetables.
"To protect insurers against unnecessary losses, FICO takes a comprehensive fraud prevention and management strategy. Powerful fraud analytics identify suspicious applicants, claims, claimants and policies at the earliest moment possible," he told Business Times.
FICO is a recognised leader in fighting fraud, both in banking and insurance.
The company's solutions, he said, identify premium leakage and predict the likelihood of future claims fraud.
"Predictive analytics identifies those new customers most likely to commit fraud and can also be used to detect changing patterns of behaviour at renewal," he added.
Horwitz, a senior director at FICO, was recently in town to familiarise insurance players here on the company's solutions and ability to win the battle against fraud.
According to FICO country manager Dinesh Pereira, the company has received a lot of requests from several customers in the country for its solutions.
"We are already engaged in discussions with customers who see value in our services," he said.
FICO has had a presence in Malaysia since 2005, working with clients in the banking sector.