A group representing auto insurance companies has inked a five-year deal with BAE Systems Detica to use the UK firm’s anti-crime analytics tool system to help in detecting fraudulent auto insurance claims in Ontario.
The Canadian National Insurance Crime Service (CANATICS), a non-profit organization focused on fighting insurance crime primarily by using pooled data from the industry to help insurance companies conduct insurance fraud investigations, said the project may be expanded across Canada.
A recent report from the Ontario Auto Insurance Anti-Fraud Task Force estimated that as much as $1.6 billion a year is paid out by insurance companies to fraudulent and inflated claims. Insurance fraud is a significant cost to consumers across Canada, and particularly in Ontario where motorists pay some of the highest insurance rates in the country.
Sifting through potential fraudulent claims is a laborious process and analytics can help speed up detection, according to Ben Kosic, CEO of CANATICS.
“We have chosen BAE Systems Detica to work with us on this important project as we need a partner who will provide the critical knowledge, skills and services that will enable CANATICS to provide the insurance industry with superior intelligence derived from analytics on industry-pooled data,” he said. “…we can help ensure that investigators, at our insurance members, focus their investigations on the right claims…”
The project will involve the use of Detica’s NetReveal anti-financial crime solution, which is currently being used by more than 130 organizations around the globe, including the six top banking and insurance companies in the world.
The system will essentially sift through data on insurance claims provided by Canadian insurance firms and third party data and look for “connections” that point to a possible fraudulent claim, said Paul Henninger, global product managing director for BAE Systems Detica.
He said the system will primarily be looking for patterns and links between names of claimants, and other people involved in an accident, lawyers, accident sites, physicians, auto repair shops and other data.
“The core of what the system does is social network data analysis,” said Henninger. “NetReveal analyzes the extent to which individuals, organizations and activities are interlinked.”
The goal is not just to detect individual instances of fraud, according to Henninger, but also to uncover organized rings involved in insurance claims fraud. Because crime rings target various insurance companies, NetReveal needs to have access to data from a wide selection of insurance companies.
“Past investigations in various jurisdictions have revealed that many fraudulent claims stem from organized activities of a few groups,” he said. “The system will look for recurring occurrence of individual’s names or businesses in claims submitted to the various insurance companies.”
Once the system detects suspicious links, a report is sent to the insurance company concerned. It is up to that company to use the information and conduct its own investigation.