SAP Fraud Management for Insurance
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Industry Data Emphasizes the Opportunity for Fraud Management Excellence Total cost in the US of insurance fraud (non-health) is estimated to be more than $40 billion per year (Source: Federal Bureau of Investigation, US) Fraud Investigation is time consuming Insurance fraud has risen by 23% in the last 12 Month. as a result, insurance fraud is estimated to now cost 2.1 billion per year. (Source: Experian Fraud Report 2012) According to the Association of British Insurers, the sector is detecting more than 2,500 fraudulent claims worth 18 million every week. (Source: Experian Fraud Report 2012) Source: Accenture global claims study (3000 personnel interviews) Historical fraud detection methods identify only 10% of fraud cases. In combination with post-payment identification only 5% of detected frauds are recovered. 2013 SAP AG. All rights reserved. 3
What Does This Mean for Your Business? How can we identify fraud before the financial damage has happened e.g. a claim is paid? How can we improve the fraud investigation efficiency? How can we keep track with changing fraud behaviors? How can we reduce the false positive signals? What is the best approach to automate the fraud detection process and predict the likelihood of fraud? How do we manage to check all claims for fraud but ensure fast claim processing? How can we better fulfill compliance regulations? 2013 SAP AG. All rights reserved. 7
SAP Fraud Management for Insurance Prevent. Detect. Investigate. Monitor. Prevent Detect SAP Fraud Management helps Insurance companies to optimize their combined ratio by identifying claim frauds and avoid payments on illegitimate claim requests Monitor Investigate Powered by SAP HANA Closed-loop Fraud Processing: Supporting the full cycle of Fraud Management enabling you to detect and prevent claim fraud across multiple line of business with direct impact on your loss ratio. Seamless Integration: Bi-directional integrated fraud processing to detect suspicious claims as early as possible and real-time information flow to ensure focused and integrated investigation Optimized Investigation: Intuitive functionality to support your fraud investigators process fraud alerts from first fraud signal to final decision in the most efficient way. 2013 SAP AG. All rights reserved. 9
SAP Fraud Management for Insurance Integration Configuration Platform Fraud Management A Closed-loop, Cross-Functional Process Monitoring Fraud Monitoring & Performance Optimization Prevention Fraud Pattern Analysis Define Rules & Predictive Models Setup Fraud Detection Strategy Calibration & Simulation Detection Online Detection Mass Detection Investigation Alert Notification Inquire & Analyze Investigation Evaluation & Decision Claim Handling & Settlement (*) From Claim Notification to Claim Closure Head of Fraud Investigation Fraud Investigator Business Analyst Head of Claim Management CIO (*) Claim Handling & Settlement is ONE of the business processes SAP Faud Mangement for Insurance can work with 2013 SAP AG. All rights reserved. 11
Fraud Prevention Objectives, Issues, Capabilities, and Benefits Objective: Define high effective fraud strategies based all relevant data in an easy way without IT-Involvement Best practice solution: Real time fraud pattern analysis and advanced, easy to use capabilities to set up hybrid fraud detection strategies. Issues Key business capabilities Benefits Unknown fraud patterns often not identified Time consuming process and high effort to change existing rules No system support to simulate impact of detection methods Pattern analysis and fraud rule testing limited to sample data from only a few data sources Limited capabilities for LoB specific fraud criteria Hybrid combination of rules and predictive methods to identify fraud Business users are enabled to define fraud detection strategies incl. optimization based on weight factors and thresholds Real-time simulation and calibration of fraud detection strategies All data from different source (SAP and non-sap) can be Determination of strategies detection based on fine granular criteria Identify unknown patterns and react quickly on changing fraud behaviors Reduced effort without IT-involvement to set up and calibrate fraud detection strategies Transparent, real time information of impact on new / changed strategies No misinterpretations of fraud behaviors due to sample data Reduced false positive and streamlined fraud detection 2013 SAP AG. All rights reserved. 12
Fraud Prevention Detailed capabilities Define fraud detection strategies in combination of rules and predictive analytical methods including real-time simulation and calibration of these strategies. Provides an intuitive, easy-to-use environment for designing predictive models and visualizing data, which allows to uncover hidden and untapped fraud patterns including a broad range of data and model visualization capabilities to gain higher insight 1 Pattern Analysis 2 Predictive Analysis 3 Fraud Detection Strategy 4 Simulation & Calibration High-speed pattern analysis based on all available data Design mathematical modes to predict likelihood of fraud Combination of fraud rules and predictive analytical methods Real-time simulation of defined strategies to reduce false positive Consolidated data from SAP and non-sap sources within SAP HANA Model design and the data visualization Drag-and-drop visual interface for data selection, preparation, and processing Broad visualization capabilities Intuitive way of setting up fraud detection strategies Define individual weight factors and thresholds to calculate risk score Fine granular determination of fraud detection strategy Optimize results of fraud strategies with real-time calibration Capability to compare fraud detection strategies for further optimization 2013 SAP AG. All rights reserved. 13
SAP Fraud Management Design & Setup Time How to detect fraud - it is your choice! Known Patterns Expert Knowledge Rule Creation Unknown Patterns Detection Methods Detection Strategy Business Process Database Predictive Model Creation & Training Optional Via SAP HANA Studio or SAP Predictive Analysis 2013 SAP AG. All rights reserved. 14
SAP Fraud Management How to detect fraud - it is your choice! External Hint Alert Known Patterns Expert Knowledge Rule Unknown Patterns Fraud Detection Strategy Fraud Detection Alert Database Data Analysis Predictive Algorithm Alert 2013 SAP AG. All rights reserved. 15
Predictive Algorithm to identify unknown Fraud Patterns SAP Predictive Analysis 2013 SAP AG. All rights reserved. 16
Visualization gains insight into unknown Fraud Patterns SAP Predictive Analysis Scatter Plot Parallel Coordinates 2013 SAP AG. All rights reserved. 17
Unknown Patterns: Informed & adapted with Predictive Insights SAP Predictive Analysis DecisionTree 2013 SAP AG. All rights reserved. 18
Fraud Detection Strategy - Detection Methods SAP Fraud Management 2013 SAP AG. All rights reserved. 19
Simulation & Calibration SAP Fraud Management 2013 SAP AG. All rights reserved. 20
Fraud Detection Objectives, Issues, Capabilities, and Benefits Objective: Detect fraud situations as early and as precise as possible to avoid claims payments for fraudulent cases without manual work Best practice solution: Integrated fraud detection with online & mass detection capabilities incl. transparent scoring results and seamless process integration Issues Key business capabilities Benefits Fraud situation often identified after settlement of claim No capabilities to check existing claims with updated fraud strategies Fraud detection based on claim handlers experience; manual process to overcome system boarders Limited to no real-time process integration into claim handling process Online fraud detection at any point and as often as needed within claim process High-speed mass detection due to HANA technology Provide claim handler with fraud signals while capturing data based on hybrid fraud detection strategies Fully integrated bi-directional fraud processing Identify fraud as early as possible - before claims are further processed and paid Use online real-time detection or mass detection without limitations Early identification of potential fraud situation to enable claim handler gathering more data Apply automated fraud detection to reduce manual work, ensure re-scoring due to claim changes and provide results of investigation back as soon as possible 2013 SAP AG. All rights reserved. 21
Fraud Investigation Objectives, Issues, Capabilities, and Benefits Objective: Investigate on fraud cases with an environment for processing fraud cases more effective and efficiently. Best practice solution: Closed loop fraud investigation processing, full insight into all relevant information, highspeed in-memory analysis to identify fraudulent behaviors and advanced alert management capabilities Issues Key business capabilities Benefits Significant work and effort spend on non value cases Time consuming data gathering due to system boarders High effort due to insufficient investigation capabilities High workload due to huge number of false positive Changed claim situation not visible for Investigators Up-to-date fraud scoring based on hybrid fraud detection strategies Full insight into all relevant information at the fingertip Advanced alert management functionalities and capabilities Calibration of existing fraud strategies with weight factors and threshold to reduce false positive Fully integrated bi-directional fraud processing Increase investigator ROI by focusing on high score / high value cases Faster fraud processing to avoid blocking a claim longer than needed Improve investigator efficiency and reduced fraud processing expenses Improved accuracy of fraud detection with reduced false positive and false negative detections Investigation always on up-to-date information to avoid double work 2013 SAP AG. All rights reserved. 22
Fraud Investigation Detailed capabilities Closed-loop fraud investigation processing to capture all findings of the fraud investigator up to the final decision. Support streamlined processing due to full insight, high-speed in-memory analysis and social network analysis to identify suspicious behaviors. 1 2 3 Alert Notification Inquiry & Analyze Investigation 4 Evaluation & Decision Online and mass detection fully integrated into Claim process Alert generation based on individual thresholds Automated coverage referrals set based on identified fraud signal Risk score & Value based prioritization of work list Integrated insight into all relevant information such as claim, claim history, involved parties, Google-like search across data sources Explorative Analysis and ad-hoc queries to gain complete perspective of situation Network Analysis to identify relationships and networks Fast and intuitive way to capture of investigation findings Collaboration with external investigators in the field Comprehensive Alert Management capabilities Fast-Decision Support to enable efficient fraud investigation Based on decision capturing further claim processing is being triggered accordingly 2013 SAP AG. All rights reserved. 23
Alert Notification Home Screen SAP Fraud Management 2013 SAP AG. All rights reserved. 24
Alert Notification Alert Worklist SAP Fraud Management 2013 SAP AG. All rights reserved. 25
Inquiry & Analyze Alert Detection Log SAP Fraud Management 2013 SAP AG. All rights reserved. 26
Inquiry & Analyze Claim Overview SAP Fraud Management 2013 SAP AG. All rights reserved. 27
Inquiry & Analyze Network Analysis SAP Fraud Management 2013 SAP AG. All rights reserved. 28
Evaluation & Decision Alert Documentation SAP Fraud Management 2013 SAP AG. All rights reserved. 29
Evaluation & Decision Alert Closure SAP Fraud Management 2013 SAP AG. All rights reserved. 30
Fraud Monitoring & Optimization Objectives, Issues, Capabilities, and Benefits Objective: Real-time performance analytics and management reporting to make informed decisions and take appropriate, timely action Best practice solution: User-centric dashboards provide users on all level with accurate and consistent data Issues Key business capabilities Benefits Poor control over team workload and overdue fraud signals Limited capabilities to measure fraud investigation performance No Insight into effectiveness of fraud rules and strategies Work and performance analysis incl. operational reporting Monitor and optimize quality of investigation Permanent analysis of results including real-time calibration of strategies Accurate, consistent and transparent data for informed business decisions - any time & anywhere React immediately on changing situation to improve efficiency Optimized fraud strategies based on real time data to react on changing fraud behaviors 2013 SAP AG. All rights reserved. 31
Ad-hoc Calibration Mobile Application Lab Preview 2013 SAP AG. All rights reserved. 32
Fraud Analytics mobile as well! 2013 SAP AG. All rights reserved. 33
IT & Technology Objectives, Issues, Capabilities, and Benefits Objective: Respond rapidly to business needs while keeping costs under control Best practice solution: Integrate one strategic and integrated closed-loop fraud solution across LoB s for best overall TCO Issues Key business capabilities Benefits High integration and maintenance costs due to a multitude of diverse functional systems Hugh effort to keep track with ever demanding requirements of business units to address changes in insurance fraud trends Development and maintenance of fraud strategies requires IT involvement Highly integrated & configurable solution based on flexible and communication based open standards Scalable, component-based standard application Business users are enabled to define fraud detection strategies incl. optimization based on weight factors and thresholds Flexibility to configure the solution based on specific business needs integrated in your existing system landscape Implementation in a step wise approach and adapt solution depending on the business needs Reduced effort without ITinvolvement to set up and calibrate fraud detection strategies 2013 SAP AG. All rights reserved. 34
SAP Fraud Management for Insurance Prevent. Detect. Investigate. Monitor. Prevent Detect 1 Closed-loop Fraud Processing Execute your fraud program with most comprehensive approach 2 Seamless Integration Enable real-time fraud management across your value chain Investigate Powered by SAP HANA Monitor 3 Optimized Investigation Increase investigator s effectiveness and efficiency 2013 SAP AG. All rights reserved. 35
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Fraud Management Architectural Overview Browser Mobile Desktop UI Native ipad App R R OData via SUP Service Fraud Management SAP ERP SAP LT Replicator R Application Server ABAP R Non - SAP R BOBJ Data Services Tables, Views, Procedures SAP HANA 2013 SAP AG. All rights reserved. 37
SAP Fraud Management Design & Setup Time How to detect fraud - it is your choice! Detection Create Alert Create Alert manually (e.g. whistle blower) Create Alert automatically via Detection Online & Mass Detection Capability for extensibility such as customer specific workflow, Assign Alert Pull by Investigator Assigned to Investigator by Fraud Dispatcher Assigned automatically due to customer specific algorithms (based on extensibility options) Investigation Investigate Alert Task Management Case Management Configurable Activities Capability for extensibility such as customer specific workflow,.. 2013 SAP AG. All rights reserved. 38
Inquiry & Analyze Conflict of Interests SAP Fraud Management 2013 SAP AG. All rights reserved. 39
Inquiry & Analyze Conflict of Interests SAP Fraud Management 2013 SAP AG. All rights reserved. 40
Inquiry & Analyze Network Analysis SAP Fraud Management 2013 SAP AG. All rights reserved. 41
Inquiry & Analyze Network Analysis SAP Fraud Management 2013 SAP AG. All rights reserved. 42