Enterprising Developments

Another Great Reason Why Big Data Analytics Matters

Joe McKendrick
Insurance Experts' Forum, February 21, 2013

Big data analysis is very effective at combatting fraud, but there's more. For one, the ability to catch patterns of fraud may turn potential fraudsters away at the gate, before they even attempt to file a first notice of loss. Secondly, confidence in analytics to catch potential fraudsters will smooth and speed up the clean claims, improving customer satisfaction.

That's the word from Kim Minor, insurance industry marketing manager at IBM, who is a proponent of applying big data analytics to this leaky area of the business. In a recent podcast, she points out that up to 10 to 20 percent of claims are fraudulent.

Clean claims go through faster, which reduces costs for insurers, and also makes customers happier as they get their money back faster. Also, by pulling in social media data, insurers can more readily spot evidence of fraud.

“Our goal is to prevent fraud,” says Minor. “We don’t want the insurance company to ever take that claim. When they first receive that first notice of loss, they may be able to say something like, 'oh my, you’ve been having a really bad year. We’ve noticed that you have been involved with claims throughout the year.' Just to alert the person reporting the claim that we might be on to them, and usually they will choose not to report that claim.”

Along with heading off a potentially fraudulent claim, the ability to detect fraud makes things flow for the 80 to 90 percent of legitimate claims, she continues. “An interesting byproduct of this is the clean legitimate claims that come in get processed so much faster, because they don’t have to be bogged down. Then there's really positive impact, particularity in the economic times were having, to do cross-sell activity. It's just the added benefit of where there’s a legitimate claim, it really goes a long way with retention efforts, a truly strong customer story as a byproduct of adopting a strong analytical process at claims.”

Minor reports witnessing a “30-plus-percent improvement in retention” at a client that was able to “focus their effort on potential fraud and reduce the amount of human involvement.” In the process, special investigation units can focus their efforts on the cases that really matter.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments...

Already Registered?

If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.

Forgot your password?

Not Registered?

You must be registered to post a comment. Click here to register.

Blog Archive

Opinion: Halbig Decision Creates New Level of Uncertainty for Obamacare

Time will tell if the Halbig decision remains viable. But in the meantime, a new level of uncertainty has been injected into the process.

CIOs: "We Don't Have Enough People to Run Our Mainframes"

Insurers will be competing with other industries for both legacy and “new IT" talent.

4 Ways to Keep Insurance Data Quality Healthy

Continually building trust and credibility in the data is the key to a successful data warehouse.

Customer Experience Trend Watch

Three recent HR moves demonstrate that large life insurers recognize customer experience as a strategic differentiator.

Insurers Have a Lot of Data, But Too Many Silos

Insurers actually have more data analytics resources than other industries.

Are Data Centers Shrinking or Expanding?

Today's data centers are doing far more with much smaller footprints.

Advertisement

Advertisement