Data analytics helps Discovery crack whip on fraudulent claims

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JSE-listed financial services group Discovery Life says it is leveraging innovative technology and data analytics to crackdown on fraud and ensure quick turnaround times in insurance claims processes.

This emerged during Discovery Life's annual claims update media briefing held virtually this week.

The JSE-listed financial services group announced it had paid out a total of R11.79 billion in claims in the 2021 calendar year, nearly triple the amount paid out in pre-pandemic times.

It also noted that 1% of claims made last year entailed fraudulent claims submitted through its claims department.

COVID-19 claims on both group and individual life policies over 2020 and 2021 totalled R6.5 billion, with R3.8 billion having been paid in 2021 alone on individual life policies, it said.

Speaking during the webinar, Gareth Friedlander, deputy CEO of Discovery Life, noted data-driven tech has played an important role in enabling a client-centric approach to innovation and optimising the claims processes.

The insurance industry is in the midst of a big tech shake-up, as companies across the globe accelerate the use of emerging tech to streamline services and future-proof their business to better compete with incoming digital-native players.

“The best example of using data to innovate is probably in our claims processes. We use our data to improve the claims process for clients and we’re constantly improving the digital aspect of the business by allowing clients to submit their claims online and capture the info online,” explained Friedlander.

“Thankfully, fraudulent claims are in the minority, which does allow us to spend a bit more time understanding the claims and type of fraud. Data is key in this process – we can use data to pick up fraud by building actuarial models where anomalies are flagged to indicate where to search for potential fraud and non-disclosure that may have occurred.”

Life insurance fraud is committed by policyholders, insurance agents, scammers and other third-parties for financial gain.

Friedlander highlighted the importance of applying the right amount of rigour and paying attention to detail, especially during instances where the reason for the claims is complex.

Gareth Friedlander, deputy CEO of Discovery Life.
Gareth Friedlander, deputy CEO of Discovery Life.

The latest data from the Association for Savings and Investment South Africa shows local life insurers detected 4 287 fraudulent and dishonest claims worth R787.6 million across all lines of risk business in 2021 – up from of R587.3 million worth of fraudulent claims made in 2020.

Some of the most common instances of life insurance fraud include not revealing important health information about the policyholder, forgery of documentation, information claims fraud, agent fraud, and in other instances, the insurer could be the perpetrator, by denying due benefits to rightful recipients, according to RetireGuide.

Also speaking during the Discovery Life webinar, Dr Maritha van der Walt, Discovery Life chief medical officer, highlighted the role of data analytics in fraud detection.

“We also look at, of course, the medical evidence, and sometimes things just don’t make medical sense. That’s when we do more enquiries and conduct more reports and so forth. So we use data and outliers and every resource we can, because in the end it’s to everybody’s advantage that we do not make payouts on fraudulent claims because it will impact on premiums.

“Something that we are also doing is virtual underwriting, which was introduced during the time of the pandemic to allow the client to on-board with the assistance of a health professional.”

Discovery Life’s claims data shows mental health and suicide incidents are on the increase in SA.

“In 2021 alone, Discovery Life recorded an 18% increase in the number of suicides year-on-year, with R405 million paid in claims related to mental and behavioural conditions and suicides. In the last four years, our data shows the number of suicides is more than 25% higher than in the four years before that,” noted the insurer.

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15 Aug
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