The word ‘triage’ tends to bring to mind the settings of a hospital emergency room. Doctors and nurses try to examine the patient data quickly to ensure that patients with the most urgent needs are treated first. This same concept holds true for insurance. Understanding which claims need further examination is a daily struggle that most P&C insurers deal with.
The Federal Bureau of Investigation estimates that the total cost of insurance fraud (excluding health care) exceeds $40 billion per year. That means insurance fraud costs the average U.S. family between $400 and $700 annually in the form of increased premiums. Some call this the ‘fraud tax’.
A central component of a successful claim triage program is the ability to quickly and correctly identify a suspicious claim. These technologies trigger alerts when claims fall outside of normal patterns. The market is well served with competing technologies that provide rules-based predictive and behavioral analytics.
With predictive analytics, fraudulent claims tend to slip through the cracks if the fraudster is careful not to trigger an alert by doing anything that would look suspicious. Fraud is a chameleon, after all, and it thrives when allowed to blend into the background patterns.
A key new tool has emerged over the past few years which allows insurers to focus on the ‘who’ as much as the ‘what’. Identity resolution engines look at all of the attributes of the people, places and things involved in a claim and compare them to the goldmine of data already sitting behind the insurer’s firewall. Accounting for variations in names, addresses, dates and a host of other attributes, identity resolution engines look at possible identity matches across data silos, while simultaneously discovering hidden social links between individuals. For example, does the witness in Claim A share an address with someone currently being investigated by SIU in Claim B? Do they have similar names or phone numbers? Is there a fraud ring at work here?
Exposing suspicious claims based upon this robust analysis of the people involved is a sure-fire way to expose the chameleon and reduce fraud costs dramatically.
Westminster Group PLC (LON:WSG) said it has secured distribution rights in the UK and the Middle East for the identity fraud detection software of Texas-based Infoglide Software. The commercial details of the deal were not disclosed. Westminster expects the product to be popular with national security agencies across the Middle East in particular. Infoglide’s identity resolution technology searches, matches and links entities across multiple, disparate data sources using over 50 algorithms.”
“Dr. Wayne, a 50-year-old osteopath, denies abusing the system and hasn’t been accused of wrongdoing by authorities. He says his regimen ‘does wonders’ if used correctly. He adds that he gave physical therapy to ‘patients who needed it, with appropriate diagnoses, and I should get paid for it.’ Medicare administrators apparently felt otherwise. In 2009 he says he was placed on heightened scrutiny and eventually sold his business. But not until he had received more than $2.6 million from Medicare between 2007 and 2009, according to the person familiar with the matter.”
“Unlike oil reserves, data is an abundant resource on our wired planet. Though much of it is noise, at scale and with the right mining algorithms, this data can yield information that can predict traffic jams, entertainment trends, even flu outbreaks. These are hints of the promise of big data, which will mature in the coming decade, driven by advances in three principal areas: sensor networks, cloud computing, and machine learning.”
“Specifically, on October 1, 2009, MARTINEAU purchased a residence at 211 Lloyd Street in New Haven after working with others to obtain an FHA-insured loan to buy the house at the fraudulently inflated price of $160,000. The loan package for this transaction included false information about the MARTINEAU’s employment, assets and liabilities, and MARTINEAU’s intention to occupy the property as her principal residence. The loan application also was supported by false documentation, including earning statements and fraudulent bank records.”
“We’re currently in the heat of the election season. No matter how impeccable the record of any candidate that the major parties put forward, minions of the opposing parties go to great lengths to uncover an embarrassing incident that can be exposed (or even an incident that can be twisted to appear embarrassing) in order to influence voters away from voting for that candidate. While the populace is reasonably good at figuring these tricks out, even more disturbing are the stories involving voter fraud.”
“Also, many data quality vendors specialize and provide depth of expertise in a focused part of the data quality market such as postal address verification (e.g., Experian QAS, Melissa DATA), matching or identity resolution [e.g., Infoglide Software, Netrics (acquired by TIBCO Software), and Pervasive Software], and data profiling (e.g., Ab Initio and Business Data Quality).”
“The R.I. State Fusion Center, a state police unit that tracks information on homeland security and crime, assisted in the investigation through the use of facial recognition software that determined that Medrano had been previously issued a Massachusetts identity document in his real name.”
“While TSA’s watch-list matching takes seconds and can be completed up until the time of departure, the agency cautions passengers that a boarding pass will not be issued until the airline submits complete passenger data to Secure Flight. The agency noted that, despite the crackdown, minor variations in the name on the boarding pass and ID, like middle initials, should not present problems at checkpoints.”
By Mike Betron, Infoglide Software Director of Marketing
A recent article in Bank Systems & Technology says that financial services institutions are discovering increasingly sophisticated attempts to defraud their customers – more sophisticated in how they gather information and employ it in their criminal schemes. “As fraudsters increasingly seek to exploit weaknesses in consumers’ defenses through social engineering schemes rather than hack vulnerabilities in banks’ security systems, the need for enterprisewide solutions to detect fraud across channels is greater than ever.”
The sources of information about individual consumers are rapidly growing and increasingly accessible. Most of us concerned about our personal information think first about that portion of the World Wide Web that is indexable by conventional search engines, sometimes called the “surface web.” That information is more easily monitored and managed than social media sites (e.g. Facebook) and other dark web sources such as local, state, and government databases.
What is needed is a comprehensive picture of our personal online reputation, but it’s not a simple task. It requires the ability to tie together diverse data from a multitude of sources in a variety of formats. Using similarity searching, advanced filtering, and sophisticated scoring, federated searching across disparate data sources can produce a unified view of an individual’s “identity” for ongoing monitoring. Ideally, that unified identity can be refreshed using automated rather than manual processes.
Identity resolution offers the ideal core technology for any solution designed to present a unified picture of personal identity across surface web, dark web, and social media sources. Since identity resolution engines are designed to incorporate new data sources without requiring system rewrites, they offer the best hope for deployment of extensible systems for online identity management.
The accepted meaning of “multi-factor authentication” is employing at least two of the three standard factors used to authenticate identities:
something the user knows (e.g. , PIN or password)
something the user has (e.g., ATM or smart card)
something the user is (e.g., biometric such as fingerprint)
Building upon this well understood concept in the banking and financial services world, I’d like to describe how identity resolution technology extends and greatly enhances the value of authentication systems to the enterprise.
A tacit assumption of multi-factor authentication is that the user mentioned above is legitimate: how else could he or she have the password, smart card, or biometric data? While this assumption may be enough to protect against stolen cards, it doesn’t guard against the user who finds a way to open an account through legitimate means with the intent to defraud. Let me explain.
Billions of dollars are laundered through banks and other financial institutions each year. Accounts (and account owners) that appear legitimate to the institution often move money into and out of the financial system undetected by various means, including trade-based money laundering. Presumably this activity happens despite the presence of authentication measures.
To catch the perpetrators, institutions often focus on improving data quality, either through simple measures like de-duplication or more sophisticated master data management systems. We’ve talked many times here about how these “data quality” efforts can actually harm the process of identifying multiple identities and hidden relationships held by bad actors.
Consider instead the benefits of of integrating authentication systems with high-powered identity resolution systems tied to multiple data sources. Existing multiple identities and hidden relationships become another layer of authentication and incorporate fraud identification into the process. If Joe Blow has multiple related identities, for example, the system can pose a question during authentication drawn from one of the identities that would validate whether the user was legitimate.
Food for thought, and we’d like to hear your thoughts!
“The hottest non-fiction book at the moment is The Big Short: Inside the Doomsday Machine. Best-selling author Michael Lewis explores and explains what went on behind the scenes during the years leading up to the big stock market crash in 2008 and answers a crucial question: “Who understood the risk inherent in the assumption of ever-rising real estate prices, a risk compounded daily by the creation of those arcane, artificial securities loosely base on piles of doubtful mortgages?” While misguided government policies together with greed and stupidity provide the larger answer, events during that time beg certain questions about the specific ways in which credit risk is evaluated.”
“There have been 173 reported data breaches so far in 2010, and 34 of these involve financial services companies. This means that in less than one quarter of the year, we already have seen more than one-third of the 62 banking-related breaches reported in all of 2009… If the breach trends do continue as they did in 2009, then financial service companies will continue to experience malicious hacking and insider theft. The challenge for organizations such as the ITRC is that many organizations fail to report their breaches.”
“Both tickets were presented to Ikhlayel by undercover lottery investigators posing as customers. In both instances, Ikhlayel told the investigators the tickets were not winning tickets. An investigation indicated both tickets were validated at the Downtowner Marathon shortly after being presented to Ikhlayel, authorities said.”
“Employers that aim to lower their workers’ comp expense through dishonest means try all sorts of tricks, from under-reporting payroll to lying about the state in which their employees work. Such ruses seldom succeed since insurers regularly audit insureds for premium fraud, and they’ve seen every trick in the book. Moreover, the modest boost that premium fraud gives the bottom line is hardly worth the risk.”
“Whether it’s worthless health plans peddled by fax, staged auto accidents, arson or slip-and-fall accidents at the local mall, insurance fraud of all kinds is booming in the recession and consumers are paying the price in higher premiums.”
“Poulter said that when it comes to areas such as fraud detection and anti-money laundering (AML), identity resolution technology can assist financial institutions in combating identity fraud and leverage name matching of hidden patterns and correlations to prevent attempts to disguise identity. A single view of this information plays its part in the fight against terror, giving authorities a greater ability to prevent money laundering, which may lead to the funding of terrorist campaigns.”
“Over the next two to five years, expect to see enormous conflict about the technical pros and cons of cloud computing that will, at bottom, be motivated by the perception on the part of the participants as to whether cloud computing represents a benefit to be embraced or a threat to be resisted. In particular, cloud computing’s three characteristics — the illusion of infinite scalability, lack of a long-term commitment, and pay-by-the-use — will result in three revolutions in the way IT is performed, and each of the revolutions will have its adherents and detractors.”
“Restated, intelligence information sharing, analysis and proactive action (such as that performed by Interpol) are the most efficient way to economically battle terrorism. Interpol’s mission is to coordinate information and operations among nations, to allow countries to track criminals across borders and share information of common interest. This also happens to be a very good way to describe the business function of entity resolution technology.”
“While SHARE is strictly for communications between law enforcement and the state’s Fusion Center, a companion portal, called the Portal to Uphold a Secure Homeland (PUSH), was also developed as part of the USDHS ITEP project to support private sector security personnel who oversee critical infrastructure.”
“You may not be aware of this, but medical-related fraud and identity theft are growing problems in America. With the exploding cost of healthcare, increasing bureaucratic administrative healthcare systems, and a large, aging Baby Boomer population requiring increased medical care, it would seem that we are entering into a kind of ‘perfect storm’ for medical fraud.”
“NBTA has long supported risk-management programs that enhance aviation security. TSA’s Secure Flight helps to enhance domestic and international travel through the use of improved watch list matching, while the US-VISIT program collects biometric information from international travelers, both of which help to protect travelers and our nation. These programs should be used as readily available tools to improve the system that protects our global aviation security.”
“Should anyone need a demonstration of the difficulties that delay reaching global agreements, consider that the term “EHR” has an idiosyncratic definition in the U.S. when compared to most of the world. In the U.S. the term refers to the record of patient information that is kept by an individual care delivery organization (CDO), with the proviso that there be some degree of interoperability. In most other countries that use the term it refers to some specific sharing of information that may be sourced from many places including but not limited to the electronic patient records of individual CDOs.”
“Supporters say electronic medical records will boost the quality of medical care, reduce duplication of services, and limit errors, all of which could save money and lives. The National Academy of Sciences’ Institute of Medicine estimates that between 44,000 and 98,000 people in the United States die each year because of errors such as being prescribed medicine to which they are allergic.”
” Beginning June 1, travelers will need either a U.S. passport, a state-issued enhanced driver’s license, a U.S. passport card or a trusted traveler card to enter the country through land or seaports. Passports were made mandatory for air travel in 2007.”
“The trio appeared to be doing the kind of photographic surveillance terrorists might do before they strike a target, the officers concluded. So they contacted the Southern Nevada Counter-Terrorism Center. The center is run by Metro Police and houses investigators and analysts from local, state and federal law enforcement agencies in Southern Nevada.”
“Our customer data is now more siloed than it ever was, it doesn’t match, and the owners of the respective systems that process it don’t talk to each other much. The single version of the truth has eluded us. We’re still trying to sell customers products they already have.”
If you’re not familiar with the International Association of Industrial Accident Boards & Commissions (IAIABC), it’s a very active non-profit organization of government agencies that administer workers’ compensation programs in the U.S., Canada, and other countries. In addition to sponsoring a large number of industry events including conferences and training seminars, they publish an excellent journal twice yearly that provides educational articles about education, research, and management of workers’ compensation issues.
The April issue of IAIABC Journal includes an article authored by Infoglide’s Charles Clendenen. “Introducing Identity Resolution: A New Approach to Workers’ Compensation Fraud” discusses three types of workers’ compensation fraud and how identity resolution (aka entity analytics or entity resolution) is being applied to make the process of finding potential employer fraud easier and more cost-effective.
While medical fraud and employee fraud are significant problems, “employer premium fraud, while less publicized, can involve millions of dollars in unpaid or underpaid premiums and can cause much more damage to the insuring agency.”
Employer premium fraud can take several forms. In order to avoid paying premiums, a company’s owners may illegally classify permanent employees as contractors. Alternately, they may operate for some time without paying their premiums, and then when the insurer is about to take action, they simply shut down the company on paper and reconstitute it under another name. Companies also use this “going out of business” ploy in cases where their experience (or modification) rating has gone up due to multiple injuries, thereby resulting in higher premiums. By reopening as another company, they can effectively reset their experience rating.
Clendenen goes on to introduce identity resolution technology and discuss its origins, then talks about how it can be applied to solve workers’ comp employer fraud.
While identity resolution technologies can be applied to employee and provider fraud, they are particularly effective at uncovering employer premium fraud. Finding companies who are not registered for workers’ compensation involves comparing databases where companies are advertising themselves as open for business to lists of businesses registered with state workers’ compensation programs. The results can highlight companies who have not registered or are not paying premiums, companies who have changed their name often, and companies involved in hidden contractor/ subcontractor relationships.
The rest of the article talks in more detail about how identity resolution can be applied and the potential return on investment (ROI) agencies can expect.
Click here to read the full article, and to learn more about IAIABC, check out their web site.
Infoglide Software provides entity resolution and analysis solutions for retail, banking, insurance, government, and law enforcement. Without the need for data cleansing or warehousing, Infoglide Software's Identity Resolution Engine™ (IRE) analyzes all of the information relating to individuals and/or entities from multiple sources of data and then applies...
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