The Antithesis of Modern Claims Processing
Fraud investigators throughout the industry readily acknowledge that they only see a fraction of the fraudulent claims running through their claims-processing systems. They realize the fragility of detection and referral mechanisms; they bemoan the primacy of efficiency as the goal for the claims-processing system; and they see staff in other functions as oblivious of the fraud problem. The investigators, closest to the realities of the streets, know full well that their fraud-control apparatus--fragmented and understaffed--barely scratches the surface.
Against that depressing backdrop, the confident claims of managers at one particular insurer came as a stunning surprise. I shall refer to the insurer as Company X because the anonymity of the sites was a condition under which I visited them to conduct my fieldwork. Managers at Company X claimed that their fraud-control systems detected around 80 percent of the fraudulent claims submitted to them. They felt they had fraud under control; no other company I visited came anywhere near making such claims. Could such confidence be justified? Perhaps they were deluding themselves. Or perhaps they had such terrible detection apparatus that they really had no sense of the magnitude of the fraud problem. Or perhaps, conscious of the company's reputation, they were merely putting forward the "official position." They could not prove that they stopped 80 percent of the fraudulent claims because they, like everyone else, had no systematic method of measuring the overall level of fraud losses. They saw only what their detection systems showed them. However, company X differed from all the other insurers in several ways, not just in its confidence about fraud control. Its entire claims-processing apparatus was unique and, in many respects, represents the antithesis of modern claims processing.