The use of big data and analytics is the next step of fighting fraud across the insurance industry with one expert noting that the use of technology can help reduce fraud over the next five years.
Adrian Smolski, solutions architect for global big data and analytics firm MapR, told
Insurance Business that the implementation technology, big data and analytics is the future of fighting fraud.
“Let’s put it this way, fraud was always there,” Smolski said.
“The technology was not always there and the technology is fairly new.
“The technology has been around but it has not always considered features that the industry needs. Security, networking monitoring, all that kind of stuff came in last couple of years.
“As much as fraud will always exist, the technology has actually started to adopt itself, by developers building and designing more features into the platform, but today I would say the platform is a lot more advanced than what we see and what insurance businesses are doing.”
MapR recently released their Risk Management Quick Start Solution for financial services which uses predictive analytics to detect fraud and other illicit activities for business in financial services.
For smaller insurance businesses, Smolski said that many choose to move down a people-first route rather than relying on data and analytics software early on.
“Let’s say the tier 2 insurer, they wouldn’t be classified as high as NRMA or
Allianz in Australia but what these guys are doing is they actually bring skills in house,” Smolski said.
“They bring in people, as opposed to bringing in software which costs a bit of money, they bring in people first. They utilise quite a lot of source technology from an analytic point-of-view.
“However, the challenge you have is you are working off a sample dataset.
“You are working off a desktop and your computer doesn’t have the power a of a distributed platform. The power of a distributed platform, what we are offering to the insurance industry, is that they can analyse all the data that they have got because the distribution can actually handle it.
“For a smaller tier 2 or tier 3 insurer, they won’t necessarily invest the time or money to build the platform up first in order to do the analytics; they will do it the other way around. We will do the analytics, now we see the value in it; let’s see if we can come up with a solution.”
Smolski noted that big data and analytics technology may not first be used in order to drive down claims costs but businesses soon realise the value available.
“The major insurers in Australia are utilising platforms such as this, not from a fraud perspective but to gain more revenue,” Smolski continued.
With some putting a figure as high as 10% of all claims paid having some element of fraud, Smolski said that the industry can get to grips with the problem over the next five years.
“In terms of fraud, I think it will always exist,” Smolski said.
“In my opinion, it will never disappear however I think we will minimise it as nowadays we have very smart people working on fraud, we call them anti-fraud models or businesses, in the risk space.
“Even things like identifying theft of information, there are very smart people working on it and although the adoption on the market is relatively slow in the insurance space in Australia there are a couple of thought-leaders, the big ones in that space.
“Even the big ones, it takes a lot of time to implement a solution. There are a lot of technologies there. The NRMA is a big beast and has a lot of business units and it is tricky to work with that.
“I actually think fraud will go down in the next five years, by how much I don’t know.
“I simply think it will go down as we will get a lot smarter and get a lot more complex solutions in place that will actually avoid us to have this bottleneck for problem claimants to go through.”
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