Fraudulent claims come in many forms, from staged accidents and property damage to inflated medical bills and false theft claims, costing the industry billions of dollars each year. Recent estimates suggest more than 10% of all claims may indeed be fraudulent, and rising.

Regional P&C insurers face an uphill battle in their fight against this challenge. Traditionally smaller organizations with comparatively fewer resources than national carriers, are challenged to find ways to effectively monitor, investigate, and combat this growing concern using systems and technology that haven’t always kept pace with the more sophisticated schemes employed by today’s fraudsters.

Fortunately, modern cloud-deployed core systems empower underserved insurers to protect themselves and their customers from financial loss by providing powerful benefits that, in some cases, are otherwise out of economic reach. Moving to the cloud not only has the potential to reduce demand on already taxed IT resources, but also provides the needed capacity for the complex orchestration that enables data analytics through business rules, automated actions, and data integrations. Furthermore, true SaaS architecture decentralizes the costs of ongoing R&D and innovation, benefiting all cloud tenants without painful code upgrades.

The IBM Institute for Business Value summarized the advantages of a more modern approach to core systems. “Cloud computing has changed the way that insurers can interact with data. Compared to legacy computing, cloud computing is a cheaper, more convenient, and more flexible approach to information technology. Speed and scale get delivered via as-a-service models that enable insurers to deploy technologies more quickly than they could with their legacy in-house systems.” The Cloud-based Insurance Claim, 2021

Tried-and-true industry claims databases and their ties to cloud platforms serve as effective tools in the fight against organized and opportunistic fraud patterns. By analyzing large amounts of data from multiple sources, insurers can identify patterns and anomalies that may indicate fraudulent activity, such as a claim that has been previously submitted or a claimant with known suspicious behaviors.

Incorporating third-party data can include analyzing claim history, social media activity, and even geospatial data to identify patterns in specific areas. Aligned with analytics, insurers can use this information to quickly flag potentially fraudulent claims for investigation before they’re paid. With technology appropriately configured, business rules in modern cloud platforms can automate many aspects of third-party data analysis, aggregating insights to help make meaningful and timely decisions or execute a predetermined set of next steps.

With more powerful data providing the fuel on which advanced analytics depend, this data treasure trove continues to improve the modeling outcomes that expose the more nuanced of schemes. For example, today’s digital forensics use AI-powered algorithms to examine photographic records, looking for reused or doctored images, altered metadata, and unauthentic sourced files that might escape human review.

Stemming from technological maturity, it’s now common for core systems to provide integration capabilities with analytics from fraud vendor companies including Shift, Verisk, Friss, LexisNexis, and others. Many of these algorithms can learn and adapt over time, becoming more accurate and effective at identifying fraud as they analyze increasingly more data.

By adopting modern technology for fraud detection and prevention, insurers can effectively monitor and fight both opportunistic and organized fraudulent claims. This includes using data analytics and AI-powered insights to identify potential cases of fraud, as well as implementing platforms that allow these analytics tools to be accessible throughout the claim lifecycle.

Of course, deploying countermeasures requires a significant investment of time and resources – but the cost of inaction can be far greater. Organizations such as Wikifri, EY, and other notable systems integration firms have experts on hand to help navigate the process, vet vendors, and ensure outcomes match your overall objectives. Insurers are best served by understanding the emerging fraud threats to their book of business and employing technological approaches in the cloud to help combat them at early stages. Ultimately, this frees up resources to focus on delivering exceptional experiences for meritorious claims.