The digital frontline against insurance fraud

Revealing innovative solutions to shield against benefit claim fraud with Beneva

The digital frontline against insurance fraud

This article was produced in partnership with Beneva.

Group health and dental insurance fraud is not a victimless crime – Canadians are feeling its pinch. With hundreds of millions of dollars at stake in North America, according to the Canadian Life and Health Insurance Association, the costs trickle down to the honest policyholders.

The business environment is swiftly changing, heightening competition and risk within the sector. Challenges like theft and fraud add further complications. To navigate these difficulties, insurance providers are turning to advanced data analytics and artificial intelligence (AAAI) to improve pricing models, gain deeper customer insights, prevent fraud, and conduct thorough risk assessments.

In recent decades, the insurance industry has heavily invested in a range of technologies designed to detect fraud. These have evolved over time from simple manual red flags, to reporting and data visualization, to automated business rules, and most recently, predictive analytics. While these technologies have yielded high positive rates in some cases, their effectiveness varies in identifying known fraud schemes.

A frontrunner in the Canadian market, in tackling these issues is Beneva Inc., places a strong emphasis on prevention measures. To combat this issue, Beneva has assembled a team of experts dedicated solely to the task of fraud prevention, ensuring the long-term viability of their group plans. The group benefits fraud management team at Beneva consists of 18 individuals with backgrounds in investigation, forensic accounting, drug management, law, and administration.

Esther Gadoua, senior director of business audits, fraud management and dispute resolution for group insurance at Beneva notes, “We have a sizeable number of participant plan members, plus their dependants, so . . . AAAI allows us to prioritize certain cases.”

The ripple effect of fraud

Traditional rules-based systems are adept at identifying established patterns of fraud, but they falter when it comes to the more sophisticated and evolving patterns that have emerged in today's digital age. As digitalization becomes increasingly prevalent, insurers must stay ahead of the curve to effectively combat fraud.

As inflation surges and health care becomes pricier, group plans face pressure, leading to elevated costs. When members commit fraud, they're not merely pocketing illegitimate gains; they're also boosting insurance rates for their peers.

"Benefits fraud is becoming more widespread, in part because, as we’ve found in our research, many don't understand that it is a crime," notes Stephen Frank, President and CEO of the CLHIA. "Most people think, if you are caught, you would just repay the money.” The CLHIA also highlights there is a growing trend of organized crime rings and dishonest service providers deliberately engaging in fraud. These unscrupulous service providers reassure their victims that their actions are normal.

Fighting back

Arming insurers with advanced tools and techniques like Optical Character Recognition (OCR) and fraud pattern detection are empowering insurers like Beneva to swiftly spot irregularities.

Their AAAI systems flagged unusual activity in a plan member's account, noting rapid exhaustion of maximum coverages in consecutive years. Esther Gadoua, from Beneva, noted that without AAAI's prowess, such intricate cases would necessitate extensive investigative resources.

Gadoua says, “An insurer has a large amount of information and alerts. The challenge is to properly target what has fraudulent potential in the mass of data we have. This is the contribution of advanced analytics and artificial intelligence.”

Beyond individual company efforts, collective action is taking shape. An industry initiative launched in 2022 by the Canadian Life and Health Insurance Association brought together insurers like Alberta Blue Cross, Beneva, and GreenShield. This joint endeavor focuses on pooling anonymized claims data, harnessing AI's might to discern patterns across vast provider records.

Vivianna Botticelli of ABC Benefits Corp. emphasizes the significance of vast datasets. By accessing data from multiple insurers, patterns of abnormal behaviors become more apparent, paving the way for collaborative investigations. Such collaborations, believes Jason Fontaine of GreenShield, signify the future, with AI at the helm of fraud detection.

While the digital age may bring forth newer, complex challenges in insurance fraud, the collaborative and technological countermeasures by insurers are promising. As AI becomes a staple in fraud detection, the insurance industry is poised to not only detect but deter fraudulent activities, ensuring fairness for all policyholders.