Data miningto exposeinsurance fraudnetworks has led to 74
arrests and a five-to-one return on investment in theInsurance
Fraud Bureau'sfirst year.
Richard Davies, the IFB's deputy chairman, told Computer Weekly
in an exclusive interview that the results "exceeded all
expectations".
The IFB has outsourced its data mining operations
toDetica, a specialist IT company. Its
NetReveal software appliessocial
network analysisto huge amounts of data to
identify, understand, and evaluate higher-level networks of
potentially collusive individuals and organisations.
The IFB uploads claims data daily to Detica which then uses data
items such as names, addresses, birth dates, claims history and
tip-offs to identify relationships and their relative strength
between claimants.
Detica ran a proof of concept pilot for the IFB in 2005. "We
never expected it to be as powerful as it has turned out," said
Davies.
The IFB has used Detica's services initially to uncover gangs
that cause or fake car accidents to defraud insurers. Passing leads
to police forces and the Serious Organised Crime Agency has led to
74 arrests and "major disruption" of several gangs, Richards
said.
"I have been in the business 17 years, and I cannot remember a
year when police made more than 10 arrests for insurance fraud," he
said. However, none has been prosecuted yet because police and the
Crown Prosecution Service are still preparing cases.
But the Detica leads have allowed police to seize goods worth
£5.5m under the Proceeds of Crime Act. This could be used to repay
insurers who have lost millions to fraudsters.
Davies reckons the arrests have saved insurers at least £8m. "We
reckon insurers lose 5% of premium income to fraud," he said, "so
Detica is helping us to reduce that loss."
Whether these lead to lower premiums remains to be seen.
However, Davies believes it will be easy to sell an expansion of
the service to his 46 members and to rejustify his £8.6m, five-year
budget.
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