Insurance Fraud Prevention using Six Sigma

 

People perpetrate insurance fraud, which costs the industry lose to millions. Insurance fraud, on the other hand, is also hard to detect, with the right tools in place therefore the insurance companies have to stay observant. This can allow them to be proactive and identify when fraud is about to happen and prevent it before the damage is done. To prevent fraud, Insurance companies can take the Six Sigma methodology into their business processing which will check the damage from henceforth.

So, What is insurance fraud and how is it detected?

Insurance fraud is a scandal. It is an activity that is directed by the fraudulent act of profiting from the insurance claims process. Basically, a petitioner files an insurance claim they know is false i.e. filled with wrong information, in order to receive some gainful that they aren’t entitled to.

To prevent insurance scams from occurring, it is first required to be detected. Fraud exposure is a powerful business analysis tool that organizations use to cross-reference computerized data against consumer behavior to identify cases of fraud.

At the time of the fraud detection, tremendous sums of insurance claims information are analyzed utilizing classical factual strategies. This can be too called data mining and it is not required to be done manually since software like Minitab can enormously speed up the process and make it more appropriate. The objective is to search for exceptions; cases that altogether go astray from the anticipated standard. These can be stamped as ruddy banners, showing deception.

Extra ponder of the exceptions will uncover what to pay when searching for extortion. Usually, because it is sensible to accept that future scam cases will take a similar pattern. This is a fair fundamental outline of how to scam discovery works.

Fraud Detection with DMAIC

DMAIC methodology in Six Sigma helps insurance companies to create a regulated approach to detect fraud, which will make it more efficient. DMAIC stands for define, measure, analyze, improve, and control, which are the step to be followed by this methodology.

Now lets how DMAIC can be used for early fraud detection:

●       Define: Sources of scam can be recognized from the protection claims information based on known forms from exceptions. It is the basic step that each source has to be clearly defined.

●       Measure: From the defined stage, the levels of extortion ought to be measured. This will uncover the shortcomings involved in the process fraudulent.

●       Analyze: The information is then analyzed to figure out how the fraud really happened. Moreover, the insurance company can decide how long it will take for the fraud to be detected.

●       Improve: This includes utilizing the insights gained from analyzing the data to change current methods in the fraud detection process.

●       Control: Monitor changes to see whether they are successful at identifying extortion. Moreover, upgrade them ought to modern patterns so further fraudulent activities do not take place.

Insurance fraud detection most happens after the act has been already done and losses have incurred and it becomes challenging for insurance companies to recover the loss. With the help of Six Sigma, insurance firms can use the DMAIC methodology to detect fraud earlier and prevent before hands. This can save the company a significant amount of time and money in the long run.

To know more about Six Sigma write to in-fmsixsigma@kpmg.com or reach at +91 – 998 774 4776, +91 – 999 975 5655 or +91 – 997 245 8726

Author- Puja Das