How one AI solution is aiming to help tackle insurance fraud

As insurance carriers increasingly incorporate artificial intelligence into different aspects of their operations, one California-based data company is hoping its technology can be used to help fight insurance fraud across the industry.

Carpe Data, founded in 2016, leverages data, analytics and AI to generate proactive counter-fraud alerts on claims. Geoff Andrews, COO, Carpe Data, said this helps carriers identify previously undetected fraud, reduce loss expenses and accelerate and improve their claims resolution process overall.

“People have said data is the new oil in insurance — everybody wants more and more data. Well, I actually don’t know if that’s 100% true. What people want is to leverage data to get better and better insights,” he said.

This is the gap Carpe Data seeks to bridge. It automates 98% of the process, then uses a human element at the tail end for quality assurance to ensure the data is actually relevant to the claim.

“That way, we really eliminate any opportunity for there to be noise or false positives,” Andrews explained. “We wanted to drive operational efficiency, improve insurance outcomes or provide unique insights that weren’t available previously.”

Expanding anti-fraud detection

Insurance carriers already look at publicly available data on the internet when assessing claims. However, Andrews pointed out that this only tends to be done for one-off claims that seem suspicious, and it can be a tedious, time-consuming process.

“That could take half an hour [or] eight hours, and you don’t know if you’re actually going to find something relevant,” he said.

Carpe Data’s technology automatically sorts through that publicly available data then, after human verification, sends the carrier an automatic alert within 24 to 48 hours of receiving the claim.

It does this for every claim, not just ad hoc claimants. But Carpe Data only sends the relevant information to the carrier, increasing the chances of effectively detecting fraud.

“We send what I like to call a proactive alert. When we find something that’s helpful or relevant, whether because it helps corroborate the claim or because it may demonstrate something else that they need to look into, then we proactively generate that alert,” Andrews said.

Detailed reporting

Detailed AI-generated alerts enable insurance carriers to assess claims at scale, scan relevant public data available online and identify where a claimant may be exaggerating or misrepresenting what they have said in their claim.

Carpe Data’s model also goes beyond ranking a claim on a score of one to 10 based on how likely it is that fraud may be involved. Instead of just flagging low-ranking scores for further investigation, it provides relevant data on why a low score was provided.

“We’re not just some model that says, ‘Hey, out of a score of one to 10, Nash received a 4.5, so you should look at him’ [and] no one knows why he got a 4.5. This is a, ‘Hey, Nash said that he was unable to work and he’s collecting workers’ comp. But we found out that he’s actually running two separate businesses out of his home, and he’s posting for looking for jobs on Craigslist,” Andrews explained.

This evidentiary, fact-based information not only accelerates the claims process, but also can help carriers reduce loss expenses in cases where misrepresentation is found.

“Say you have an injury where you say that you’ve injured your shoulder or your back, but then we see that you’ve played golf the last eight weekends in a row,” Andrews added. “Maybe you had a legitimate injury, but that helps the insurance carrier say, ‘OK, I set the reserves at $50,000 because I thought it was going to be a really big claim. But I see this person is already being active, so maybe I can lower my reserve and settle this claim at $5,000 or $10,000.’”

Combating fraud together

Carpe Data acknowledged that its solutions are not a catchall solution to fraud, which is an industry-wide challenge. Rather, Andrews said the company aims to create a more tightly knit counter-fraud community, inclusive of carriers and individuals.

He noted that many consumers do not realize fighting fraud is “not just about driving more money to the bottom line of the insurance carriers,” but also means carriers can lower the cost of premiums, which helps consumers save money.

“As someone who lives in California and has only seen my auto insurance rates increase, I would love to help reduce the fraud in the states so that I can pay less on my auto insurance. We want to create that community of collaboration across our customers so we can tackle these challenges together,” Andrews said.

Carpe Data was launched in California in 2016. It has since expanded to Canada and the United Kingdom, working with over 40 global insurance carriers and several of the top 10 in the United States.

Rayne Morgan is a Content Marketing Manager with PolicyAdvisor.com and a freelance journalist and copywriter.

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Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].