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Social Media – Careful What You Post, Your Adjuster Is Watching

Fraud cost insurers billions of dollars a year and some of that cost gets passed onto consumers in the form of higher premiums. Recently, the State of Florida passed a law that extends the time limit that insurers have to pay off auto insurance claims, upping it from 30 days to 3 months. The law also provided them with more tools to fight fraud.

The law was passed because Floridians discovered that insurance fraud is far from a victimless crime. The cost of insurance was skyrocketing, in the Miami area no-fault premiums have tripled over the last five years. Organized criminals were “staging” accidents on the roadways and in some cases innocent bystanders were getting hurt. These fraud rings included everyone from lawyers and doctors to illegal immigrants. The ever increasing number of fraudulent claims has cost Florida insurers roughly $1 billion a year according to the American Insurance Association. These costs have been passed on to policyholders via premium price hikes.

A recent study by FICO found that roughly 35 percent of insurers believe that 20 percent of their claims are fraudulent. Over 50 percent of insurers expect that number to grow in the future according to the study. The dramatic increase in fraud is why insurers welcome Florida’s new law, it allows them time to properly investigate claims and look for fraud.

While Florida is helping insurers crack down on fraud, other states, including some of the biggest population states make it more difficult to fight fraud. No fault states require insurers to pay a claim quickly, usually within 30 days without assigning fault. If they fail to pay within the deadline, there can be significant fines. Fraudsters love no-fault states and often set up sophisticated rings employing lawyers, doctors and less than honest drivers.

Insurers Fight Back With Social Media and FICO

Insurers are working hard to fight fraudulent claims. They have been taking advantage of social media as well as technology developed by FICO to help root out fraud.

Social media has been in use for a number of years. Insurers will check the various social media sites, Facebook, Linked In and Google for any signs that fraud is being committed. They look for friends in common with the person they had the accident with, indicating that they may know each other.  Photos that show a person supposedly suffering from whiplash dancing or frolicking on the beach can be used to dispute disability or injury claims.

Adjusters have been trained to dive in to the social media world when investigating claims. It is surprising how many people post photos and updates that directly contradict their claims. While social media is great for catching everyday fraud, serious crime rings need more sophisticated efforts.

Using predictive analytics, insurers are able to sift through millions of data files and link claims that involve the same claimant or victim, flagging them for further investigation. Using the software developed by FICO insurers can look for claims that happen shortly after coverage is purchased or right before a car is sold. The software assigns values to claims and the higher the score, the deeper the investigation will be.

FICO has helped credit card companies fight fraud for years but have only recently moved into the insurance business. Once the claim has been flagged the software will start examining other connections, has their doctor been involved in other flagged claims, does their name match known aliases and is their address a legitimate location and not a P.O box are a few items they check.

While an insurer cannot outright deny a claim due to these red flags, it can put an experienced adjuster on the case to try to root out any fraud that might exist.

Insurance fraud is a multi billion-dollar industry and insurers are using both social media and predictive analytics to crack down on fraudsters. Florida is helping by giving insurers an additional 60 days to investigate claims.