Insurance fraud is a costly problem for the industry, costing an estimated $44 billion in 2021. Insurance companies are always looking for ways to prevent and detect fraud, luckily computer monitoring software serves as a valuable ally for detecting internal fraudulent activity.
In this article, we’ll explore the different internal threats insurance companies face regarding internal fraud, steps to mitigate these threats, and how employee pc monitoring software can help.
Common Types of Internal Fraud at Insurance Companies
Insurance companies are often targeted by internal fraud, which can be costly and difficult to detect. Here are some of the most common types of internal fraud at insurance companies:
- Dividend check distribution fraud: Employees who are authorized to request dividend checks may steal the money by depositing it into a falsified bank account or their own account. They may also change the address on file so that the check is sent to a different location.
- Settlement check distribution fraud: Insurance brokers or claims agents may change the address of the recipient of a settlement check so that they can redirect the payment. They may then change the address back to the policyholder once the check has been cashed.
- Premium fraud: Accounts payable staff at insurance companies may redirect or collect a customer's premium payment. This leaves the customer unaware and uninsured.
- Fabricated recipient fraud: Insurance agents or brokers may change the beneficiary of a policy to themselves or someone they know. This allows them to collect the death benefit when the policyholder dies.
- Underwriting discrepancies fraud: Underwriters and other agents may use equity funding techniques, such as piggybacking, to get a customer approved for a policy that they would not otherwise qualify for. They may also falsify information, such as medical records, to make the customer look more appealing.
- Corruption: Insurance employees may misuse customer data for their own personal gain. This could involve stealing credit card numbers, using customer information to apply for loans, or selling customer data to third parties.
- Fraudulent financial reporting: Insurance employees may have unauthorized access to accounting applications and financial reporting tools. They may use this access to post fake entries or override system controls to commit fraud.
- Misappropriation of assets: Insurance employees may use IT systems to hide their theft of assets. For example, they may create a fictitious vendor to facilitate payments through fake invoices. They may also steal inventory or other assets.
These are just some of the most common types of internal fraud at insurance companies. It is important for insurance companies to have strong fraud prevention measures in place to protect themselves from these losses.
Tips for Preventing Internal Insurance Fraud
Insurance companies are always under threat of internal fraud, but there are steps you can take to protect yourself:
- Conduct regular background checks on all employees. This will help to identify any potential red flags, such as a history of criminal activity or financial problems.
- Implement strong access controls to sensitive data and systems. This will help to prevent unauthorized access to data that could be used to commit fraud.
- Train employees on fraud prevention and detection. This will help employees to identify and report suspicious activity.
- Have a whistleblowing policy in place so that employees can report suspected fraud without fear of retaliation. This will encourage employees to come forward with information about fraud, even if they are concerned about the consequences.
- Monitor employee activity for suspicious behavior. This could include things like excessive internet browsing, unusual spending patterns, or unexplained absences.
Leverage Employee Monitoring Tools to Fight Fraud
By monitoring employee activity, insurance companies can identify suspicious behavior that may be indicative of internal fraud. For example, an insurance company might monitor employee internet usage to look for patterns of activity that suggest that an employee is researching how to commit fraud.
Employee tracking software can also be used to investigate claims. If an insurance company receives a claim that seems suspicious, they can use employee monitoring data to help them investigate the claim and determine whether or not it is fraudulent. For example, an insurance company might monitor an employee's email and phone records to see if they have been communicating with anyone who might be involved in the fraud.
In addition to helping to prevent and detect fraud, work from home tracking software can also deter fraudsters. When employees know that their activity is being monitored, they are less likely to commit fraud. This is because they know that they will be caught if they do.
What does detecting internal fraud with employee monitoring tools look like in practice?
Detect Internal Fraudulent Activity with Employee Monitoring Tools
An insurance company has been experiencing an increase in the number of fraudulent claims. The company suspects that some of its employees may be involved in the fraud, but they need to gather more evidence before they can take any action.
The company decides to implement remote employee desktop monitoring software to track the activity of its employees. The software monitors employee internet browsing, email, and keystrokes. It also generates reports on employee activity, which the company can use to identify suspicious behavior.
After a few weeks of monitoring, the company's fraud detection team identifies several employees who are exhibiting suspicious behavior. For example, one employee has been spending a lot of time browsing websites about insurance fraud. Another employee has been sending a lot of emails to people outside the company who are known to be involved in insurance fraud.
The company's fraud detection team investigates the suspicious activity and discovers that the employees are indeed involved in a fraud scheme. The company takes disciplinary action against the employees and recovers the money that was lost due to the fraud.
This is just one example of how employee monitoring software can be used to detect internal fraud at insurance companies. Here are some other ways that employee monitoring software can be used to detect internal fraud at insurance companies:
- Monitoring for unusual spending patterns. Employees who are involved in fraud may start spending more money than usual, either on themselves or on others.
- Monitoring for unexplained absences. Employees who are involved in fraud may start taking more unexplained absences from work.
- Monitoring for changes in email patterns. Employees who are involved in fraud may start sending more emails to people outside the company, or they may start using different email addresses.
- Monitoring for changes in internet browsing habits. Employees who are involved in fraud may start browsing websites about insurance fraud or other illegal activities.
By monitoring employee activity for these and other suspicious behaviors, insurance companies can identify internal fraud and take action to prevent it.
Employee monitoring software is an excellent tool for fraud detection, but it’s important to use it responsibly. Here are some tips for using employee monitoring for fraud prevention ethically:
- Be clear about your monitoring policies and procedures: Employees should know what types of activity are being monitored and why.
- Only collect and use data that is relevant to the purpose of the monitoring: Employee monitoring should not be used to collect data for other purposes, such as performance management.
- Be transparent about your monitoring practices: Employees should be aware that their activity is being monitored.
- Protect the privacy of your employees: Only collect and store data for as long as it is necessary.
- Use employee monitoring as part of a comprehensive fraud prevention program: Employee monitoring should not be used as a substitute for other fraud prevention measures, such as employee training and fraud detection software.
By following these tips, you can use employee monitoring software like Insightful to help you prevent and detect insurance fraud. This can help you to save money, improve efficiency, and improve customer satisfaction.