Combating Insurance Fraud with Forensic Science
Kakis, Frederic J., Risk Management
TODAY'S CLAIMS PROFESSIONAL IS FACED with an incredible number of challenges. The world is highly dependent on science and technology, and the exponential growth of these disciplines makes life on this planet infinitely more complex. With every new gadget, product, piece of machinery and chemical substance, the probability of failure and abuse is sharply increased - and so is the probability of new claims, both real and fictitious.
It is no longer necessary to make a case that fraud is the most critical issue facing the insurance industry today. Yet, despite the staggering costs of fraud to both insurers and self-insureds, the discussion of insurance fraud has remained centered mostly on defining the problem rather than on finding solutions. What is needed is the articulation of viable approaches for uncovering and discrediting fraudulent claims.
One approach is the application of science and technology as a method of dealing with fraudulent claims. From DNA fingerprinting to computer analysis and simulation, modern technology provides the technical expert with an entire arsenal of sophisticated tools that can be used against insurance fraud. It is up to the risk managers and other claims professionals to recognize that these resources are available and to begin to utilize them.
The traditional professional training of adjusters, risk managers and attorneys does not include the information that is needed to understand the numerous technical issues surrounding the modern claims scene. Attempting to keep up with this ever-changing technology is like trying to drink water out of a fire hydrant. It is virtually impossible in this age of specialization for the nonscientist to develop the necessary familiarity with modern technology to discredit a fraudulent claim. In the areas of personal injury and products liability alone, there are hundreds of technical issues from toxic chemicals to ergonomics that require specialized knowledge in order to distinguish a valid claim from a fraudulent one.
In the midst of a recession, layoffs and budget cutbacks, the nsk manager is caught between the cry for cost-effectiveness on the one hand and the need to protect the organization against fraudulent claims on the other. Recent regulatory trends demanding faster disposition of claims further compound the problem.
Another challenge facing the modern claims professional is that the insurance industry has an image problem. Most consumers think of insurers as greedy monsters that cOmpile obscene profits at the expense of the public good. Because of this negative image, the deck is stacked in favor of those who are trying to defraud the insurance company. In addition, a cumbersome system of justice makes it more expensive to fight a claim than to settle it. Finally, insurance fraud is aided and abetted by unscrupulous attorneys and medical practitioners.
HANDLING SUSPICIOUS CLAIMS
In a climate such as this, obtaining a defense verdict requires meticulous preparation and documentation. This often involves the use of sophisticated scientific methods and modern instrumentation. It should be obvious from the above that this is no job for amateurs. The claims professional will be well advised to seek the help of a forensic specialist. One would be hard-pressed to think of a case involving insurance fraud that did not require the intervention of a technical expert. The forensic application of modern science may offer the only hope of obtaining convincing evidence of fraud.
Having reviewed all pertinent documents, a forensic expert can help formulate a plan of attack that will ultimately expose a fraudulent claim. The implementation of the plan calls for the forensic expert to suggest additional technical experts, run a complete background check on the claimant, and uncover and expose inconsistencies in the various statements and documents.
A forensic expert should also help the claims professional with the discovery process by identifying critical data and documents that should be requested from the claimant or his or her attorney. …