2nd Global Summit Healthcare Fraud: Prevention is better than cure October 2012 Beaumont Estate, Old Windsor, UK

Transcription

1 2nd Global Summit Healthcare Fraud: Prevention is better than cure October 2012 Beaumont Estate, Old Windsor, UK

2 The use of intelligence to prevent health insurance fraud in the UK Association of British Insurers Mark Allen Manager, Fraud and Financial Crime Association of British Insurers

3 CONTENT Scale of fraud High impact drivers of health insurance fraud Fraud typologies Major UK counter fraud initiatives 2012 Industry messaging Measures needed to enhance health insurance counter fraud capability A holistic approach 3

4 Scale of fraud is a growing concern Insurance fraud continues to rise Every hour of every day, 15 fraudulent claims are exposed 2004: 260m 2006: 470m 2008: 730m 2010: 919m Insurers invested 200m. ROI 5:1 2011: 983m Value of savings from detected fraud: 5.7% BUT despite huge investment, around 2bn fraud is undetected

5 High impact drivers of fraud in UK PMI sector Attitudes towards health insurance fraud Sector definition of fraud Lack of formal data sharing arrangements Lack of sanction for registered doctors New platform propositions growth in on-line health product transactions 5

6 PMI fraud typologies - Policyholder Non-disclosure of pre-existing conditions Retrospective rostering Misrepresentation Policyholder Fake companies and fake beneficiaries Fake complaints to receive cash benefits Falsification of treatment invoices 6

7 PMI fraud typologies Intermediary Churning Sale of patient data for private gain without consent Medical practitioner/ provider fraud Misrepresentation about facilities Intermediary Upcoding Collusion Procedures not performed/ treatment not provided Unbundling 7

8 2012 a seminal year Insurance Fraud Enforcement Department (IFED) - Specialist bespoke insurance fraud unit - Investigate, disrupt, prevent and reduce fraud - Case acceptance/referrals criteria - Operational priorities strategic threat assessment - Measuring performance 8

9 Insurance Fraud Enforcement Department (IFED) - Operational activity - Case studies - Media engagement - Future strategy 9

10 Insurance Fraud Register taking the side of honest customers The IFR improves consumer confidence by ensuring that fraudsters face tangible consequences. It manages industry risk by introducing strong governance over sensitive insurance fraud information, generates critical mass and deliver strong financial returns. For Consumers: Meets expectation that the industry proactively manages the cost of insurance A visible deterrent a tangible consequence For Insurers Deliver the functionality the industry needs, with the right governance, using a trusted industry Centre of Excellence For the Regulator: Demonstrates continuing vigorous commitment to reducing financial crime through collaboration Financial: Break even after a maximum of two years 10

11 IFR overview IFR Consolidated List

12 Zero tolerance approach to fraud Fraud will not be tolerated. Every stolen through fraud is effectively a paid for by the honest customer Industry has complete anti-fraud strategy Message is clear - fraudsters have no hiding place Premiums commensurate with risk Applications/renewals declined Threat of custodial sentence More difficult to obtain other financial services products Challenge lies in ensuring we protect genuine customers against impact of fraud while continuing to ensure they receive value for money and an efficient service 12

13 The way forward? Learn lessons from general insurance Enhance capabilities of existing databases Explore intelligence sharing opportunities BUT be mindful of need for governance, reputational risks Change consumer mindset Devise media strategy View fraud as non-competitive issue 13

14 which requires a holistic approach Not just claims - Strikes at all stages of product lifecycle across all products Insurance fraud diverse & constantly evolving Organised vs. Opportunistic Changing fraud landscape 1st party vs. 3 rd party vs. employee vs. professional enabler Revenue supports other criminal activity To retain and grow customer base Demonstrate organisation takes fraud seriously: So why a holistic approach? Respond to key influencing factors Economic climate fuelling desperation fraud Social victimless crime? To satisfy regulatory SYSC obligations Gaming/data manipulation on aggregator sites Internet business less face-to-face validation

15 Benefits Positive results Organisation that is more resilient to fraud and not a target for the fraudster Improved loss ratios Reduced costs may lead to lower premiums Improved customer journey and more accurate pricing Increased confidence of senior management/actuaries/pricing team may embed fraud team financial results in price modelling making organisation more competitive going forward Stronger working relationship between all business divisions particularly underwriting, claims and counter fraud 15

16 But look to the future Important that look at bigger picture what is happening across the industry Tackle collaboratively at strategic level If don t work together, fraud will move round industry Identify new/emerging threats early Need work collaboratively to leverage industry assets IFB, IFED, IFR But intel sharing is part of solution, not panacea Need horizon scan to assess emerging trends/threats legislative; regulatory 16

17 For more information Association of British Insurers (ABI) Mark Allen Manager, Fraud and Financial Crime T: +44 (0) M: +44 (0) Insurance Fraud Register (IFR) Insurance Fraud Enforcement Department (IFED) Insurance Fraud Bureau (IFB) 17

18 2nd Global Summit Healthcare Fraud: Prevention is better than cure October 2012 Beaumont Estate, Old Windsor, UK