Combatting Insurance Claim Fraud: An Insurer’s Guide to Claims Investigations

Insurance fraudInsurance provides financial protection in case of unexpected losses, but spiking cases of insurance claim fraud following the tumultuous COVID-19 landscape threaten to undermine the welfare of insurers and policyholders alike.

According to the HK Legislative Council Secretariat, despite its prevalence, Hong Kong currently does not have specific legislation for insurance claim fraud. People may then exploit the legal loophole to defraud insurance companies. A professional insurance claims investigation can help mitigate risk and protect the goodwill of your customers.

What is Insurance Fraud? 

Fraudulent claims can take the form of property damage, cyber fraud, and health insurance by building and claiming false injuries. Commonly assumed to be “chump change” for insurance companies, the insurance pay-outs’ reality could not be more different. In Hong Kong, employee compensation is a prevalent type of insurance claim fraud. According to the HK Labour Department, there were 32,872 cases of occupational casualties in 2019, with the largest sectors including import/export, wholesale and retail trades, and accommodation and food services.

insurance fraud

Data-Based Fraud Detection

One method of detecting and preventing claims fraud is by using a form of central information exchange. The HKFI’s Insurance Fraud Prevention Claims Database (IFPCD) is a centralised claims database that uses big data analytics to detect possible fraud in various ways. 

However, as applicable as AI data mining tools or predictive analytics can be, fraudsters are also responding to companies’ analytical approaches, devising increasingly sophisticated scenarios. Carrying out a timely and thorough insurance claims investigation can pinpoint fraudsters in situations where data cannot, and a team of trained investigators can help. 

What is an Insurance Claims Investigation?

An insurance claims investigation helps insurers authenticate the integrity of suspicious or fraudulent claims.

Claimants of fraud such as employee compensation, personal injury, and traffic accidents may exaggerate the situation or feign symptoms. Hence, the investigation relies on collecting factual evidence through conducting research and surveillance of the target so as to uncover lies and inconsistencies in the claimants’ statements. Early identification can significantly reduce your chances of paying the fraudster.

The Claims Investigation Process

The investigation process involves various steps, including conducting a background check of the claimant, performing surveillance, reviewing official documents, and thoroughly inspecting the occurrence site. 

For example, an employee got injured outside of work but files a claim the next day stating they got hurt. An investigation would uncover the holes in the story and provide evidence-backed reasons for a fabricated claim. While some cases are more clear-cut than others, most circumstances require a meticulous investigation to prevent potential insurance claim fraud.




How We Can Help

Trusted by insurance companies and business entities in various sectors, Herald’s full suite of insurance claims investigation services can provide you with the information you need to sort out truth from fiction. We not only specialise in employee compensation claims, but also work on personal injury and traffic accident claims to help stop insurance fraud and protect your rights in cases of dispute.

Our thorough but discreet investigation process includes collecting official evidence, creating surveillance reports, and obtaining background research on the claimants. This allows insurers to make more precise judgments and clarity on the Subject’s claimed status versus the actual situation and lower the risk of costly mistakes.

Conducting an insurance claims investigation and knowing how to report insurance claim fraud will not only control costs but also strengthen brand reputation and recover customer goodwill. Learn more about how our professional insurance claim investigation services can help you prevent fraudulent claims today.