Image Source: Unsplash user Sai Kiran Anagani
Image Source: Unsplash user Sai Kiran Anagani

I recently learned something surprising about property insurance fraud. As it turns out, people were committing this type of fraud long before the industry even existed. The first known case happened all the way back in 300 B.C., when a Greek merchant decided to sink his own ship to collect on a payout from his partners.

As frauds go, he wasn’t particularly skilled because he drowned in the attempt, but not everyone is so unsuccessful, especially when you consider the fact that the insurance industry pays out about $32 billion a year in fraudulent cases. The problem is, even when a company has all the best procedures in place, there is often no real way to know if someone is being honest. However, there is a way to weed out potential fraud cases from the real ones, and it starts right at step one, during the initial interview.

One thing most insurance companies are short on is time. It takes time to do deeper investigations on cases that might be fraudulent and it can be difficult to decide which cases need these deeper investigations. Common red flags that insurance companies look out for can be real indicators of fraud, or they can simply be coincidence. At the same time, the earlier you can catch a possible fraud case, the less that case is going to cost you in the long run. That’s why a lot of savvy insurers are now turning to innovative new technologies like voice-based threat detection during their very first interviews and on to help determine where to allocate their resources and ensure the highest risk cases get the most thorough investigations.

Learn more about insurance trends with Clearspeed!

5 Fraud Indicators 

Insurers who write property insurance aren’t very optimistic about the future. About 58% of them expect fraudulent claims to grow. To prevent these cases, most insurers use a standard interview they conduct with anyone claiming a loss. During this interview, they look for the following fraud indicators:

  • Theft or vandalism claims with no police report or a report that was filed very late.
  • The insured pushes for a claims settlement very quickly and appears very knowledgeable regarding insurance claims processes.
  • Losses reported include large amounts of cash but the insured is unable to provide a verifiable source for it.
  • Losses are inconsistent with the place of theft (like expensive art or jewelry stolen from a storage shed).

These fraud indicators are a good thing to look for, but they aren’t definitive. After all, the reason we have insurance is because unexpected things happen. Most insureds claiming a loss will have explanations for these red flags. People may push to settle their case quickly because they need to replace what they lost right away. They might file late because they were on vacation. They might report a lot of lost cash because they don’t trust banks.

All these explanations could be entirely true, or the investigator could be dealing with a seasoned fraudster. The problem with red flags is that not only do insurance companies know about them, but the people who commit insurance fraud know them just as well. If they know they’re going to raise a red flag, they’re going to be prepared with an explanation. So, while the initial interview may be helpful, it can still be difficult for the claims investigator to determine if these red flags are real indicators of fraud or if they’re simply coincidence. This is where voice analysis comes in.

Learn about how to improve the insurance claims experience with Clearspeed! 

Using Technology During the Initial Interview

Remote Risk Assessment is an evolving technology that is ideal for screening out high-risk claims. It is a far superior method of assessing integrity and credibility, thanks in large part to its 98% accuracy rate. It works remotely, meaning that no matter where the location, risk can still be accurately assessed. This assessment can easily be added to the first report of loss. Usually, when an insured reports a loss, the insurer has a template that they use to decide what questions they need answered. These questions will include questions designed to uncover potential red flags. As an adjunct to this interview, voice-based risk assessment can help identify potential threats more quickly and accurately. With this information, investigators can determine in real time whether or not there might be a need for further investigation.

Learn more about SIU investigators with Clearspeed! 

A word of caution: This doesn’t mean that you should deny the claim. Instead, you need to use it as a behavioral analytics tool that allows you to more objectively categorize your claims for the appropriate level of investigation. Claims that show a high probability of deception can be assigned for on-site visits, background checks and more. On the other hand, cases that are legitimate can be paid out quickly. This technology allows insurance companies to balance fraud investigations with good customer service by allowing them to better allocate their limited resources.

We’ve come far from the days of that first Greek shipping insurance fraud, and Clearspeed now offers innovative voiced-based Remote Risk Assessment (RRA) tools for the screening of potentially fraudulent insurance cases. When someone first calls in a notice of loss, they can be forwarded to an RRA call center where the risk can be accurately assessed in under ten minutes, in any language. For more information on using our voice analysis technology as a tool for preventing property insurance claims’ fraud and expediting investigations, contact us now.