Automobile insurance is widely believed to be most affected by fraud and costs the
industry at least $29 billion a year.
Workers' compensation fraud is committed by both employees and employers, especially
during economic downturns and in high-risk industries. According to the Coalition Against
Insurance Fraud (CAIF), workers' compensation insurance fraud costs insurers and
employers $6 billion a year.
Health insurance and medical fraud have a particularly large financial impact. According to
the National Health Care Anti-Fraud Association (NHCAA), financial losses due to health
care fraud are in the tens of billions of dollars each year. Additionally, health-related fraud
increased during the COVID-19 pandemic.
According to the Coalition Against Insurance Fraud (CAIF), up to $80 billion is lost annually
from fraudulent claims in the United States alone. Additionally, it is estimated that fraud
makes up 5-10% of claims costs for insurers in the United States and Canada.
Based on statistics from the National Association of Insurance Commissioners (NAIC), the
numbers can be daunting:
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80% of survey respondents are using predictive
analytics to detect fraud (up from 55% in 2018)
The utilization of text mining to uncover
fraudulent activity has increased to 65%
(doubling from 33% just three years ago)
Insurers are increasingly using two new
technologies:
Digital identity verification solutions (35%), a
process that uses computer technology to
validate a person's identifying traits and
verifies they are really who they say they are.
Photo recognition and analysis (also 35%).
But insurers are taking action. In a new study by the
Coalition Against Insurance Fraud and SAS, newer
technologies are playing an important role:
According to the study, "a growing number of
insurers are looking to save costs by not doing in-
person inspections of vehicle property damage
claims and even on more minor residential and
commercial property claims. This fraud-related
technology allows insurers to know whether a photo
of claimed damage is real, has been digitally altered
or had been submitted previously on other claims."
