There are so many ways that insurance fraud hurts companies and also their customers. Whether it’s a bad claim or a shady broker, these frauds cost insurers over $40 billion a year according to the FBI. Those figures don’t even include medical insurance fraud, which can cost tens of billions more. Now, the insurance industry is fighting back by using artificial intelligence.
Fraud is Pushing up Premiums
The rate and cost of insurance fraud is quite staggering. According to YoungAmericaInsurance.net fraud tacks on an extra $400 per year overall in premium increases on auto insurance. Since there aren’t enough human investigators to thoroughly check up on every claim, we have to rely on machines to help us find and stop these criminals.
Artificial Intelligence is Aiding Insurers Fight Against Fraud
Using different AI machines, that help identifies inconsistencies and weird patterns, insurance companies can now flag fraud more easily. Whether these machines try to find rigged auto accidents or misreported property damage costs, there is a wide range of ways to spot these crimes using smart data. With the power of artificial intelligence and data mining, insurance costs might be reduced in the near future. That means lower premiums for consumers and fraudsters getting locked up.
Insurance Startup Lemonade uses AI Software
One such company using this power of data is New York-based Startup Lemonade. They’re a young company that works with home and renter’s insurance. Lemonade CEO Daniel Schreiber states that “Lemonade is able to evaluate and then accurately pay out claims quicker than traditional insurance companies due to its data collecting power.” Claims are instantly approved or rejected using a new algorithm created by Lemonade’s own advanced software.
Of course, there is still an element of human review as well. People can look into individual claims after they’ve been paid, just to ensure that the automated process is accurate. Machines are very accurate, but they aren’t always perfect. There remain some claims and situations that need a human eye to properly analyze.
What Lemonade is doing isn’t meant to cause more competition between insurance companies, but rather it will help insurers find a faster and more accurate way to identify insurance fraud.
One big issue is the fad of no-touch or low-touch claims processing. Insurance companies need the help of AI to deal with even the most basic of scams. This allows human investigators to get involved with more complex cases that computers may not be able to help with.
These sophisticated AI technologies can also figure out complex fraud, including when groups of people are in a scam together. If similar types of claims are being filed, even though lawyers or doctors, it will send up a red flag.
Quiggle states that the help of data crunching and AI technology is what brings the fraud into a visual perspective. It assists people in identifying what they otherwise might not have noticed without the aid of computers.
Is Big Brother Watching?
Another such reason for this sudden advancement in scam-seeking technology is the rise of available data to investigators, assistants, and digital machines. Anything from a social media post to a public announcement can be taken and analyzed as data with AI software. Pictures of license plates, photographs of someone’s injury, and even mileage tracking on a smart phone are all different types of data that can be collected to prove whether or not a claim is real.
All of these data collection strategies can be implemented when AI scans for pictures and videos on the Internet. In the future, companies may be able to accurately rely on artificial intelligence recognition image technology to help process claims. This will increase productivity in the workforce, reducing the time that humans have to spend on each claim and thus save insurers money. The biggest goal of this process is to greatly increase the customer experience and lower premiums.
The increased use of machines to help us with insurance fraud claims have definitely raised questions about privacy concerns and whether or not this complies with standard regulations in the industry.
The general rule of thumb is this: anything that can be found in a browser can theoretically be collected by any data collecting agency or machine. Relevant information can be sought out and found in any manner of ways.
This can include finding evidence about someone claiming that their car was stolen, to see if that car has been listed in a classified ad or in a social media post to see if it matches up with what the claim is stating.
The Future of Artificial Intelligence in the Insurance World
Although it is still difficult to find and bust 100% of the fraudulent claims that are being listed, the future of AI in the insurance world holds tremendous promise. Insurers are excited to reap the benefits of advanced algorithms by looking towards the development of enterprise strategies.
This can help the future use of AI in a variety of different ways, and not just for fraud, but also better overall customer experience. AI might also help lower insurance costs, which is a win-win for consumers and companies alike.