Insurers’ claims teams and investigators operate under constant pressure from two conflicting goals: Processing claims quickly and efficiently for the benefit of legitimate claimants, but also subjecting each claim to the kind of scrutiny needed to consistently detect fraud attempts.
It’s a fine balancing act. Claim fraud detection is essential, but it can’t be allowed to degrade the user experience. Consumers expect a seamless, convenient process, and they’ll vote with their feet if they don’t get it.
Yet the challenge of providing that friction-free experience is rising sharply, as generative AI tools provide bad actors with a multitude of ways to manipulate the claims process, notably through stolen data, synthetic fraud schemes, and document manipulation. Here, we explore the ways criminals exploit gaps in the industry’s fraud detection and claims validation workflows and how improved modern data tools can help counter them.
Data Uncertainty in Claims Workflows
Insurance claims handling is based on a fundamental assumption that the claimant is a legitimate customer whose policy and account information correspond to the insurer’s records. But that assumption is not necessarily valid, because uncertainty can enter the claims process in any number of ways. A few significant examples might include:
- Fraudsters filing claims under stolen policyholder information.
- Criminal networks creating synthetic fraud profiles using combinations of real and fabricated data.
- Individuals submitting claims using another person’s coverage details.
- Brokers enrolling consumers in plans without consent for fraudulent purposes.
- Fraudsters posing as beneficiaries to access life insurance payouts.
Incomplete or Inaccurate Claimant Data Adds Friction to the Process
While all the scenarios we just ran through create data uncertainty within insurance organizations, it’s important to recognize that incomplete or inaccurate data can occur organically, and isn’t necessarily a sign of deliberate fraud.
The customer data in your company’s own files, for example, will deteriorate over time as your clients move, change their phone numbers and email addresses, and go through life events such as births, deaths, marriages, and divorces. This steady decay in data reliability is a known problem for any organization that maintains large quantities of data, and it introduces a degree of uncertainty to the claims process.
Similarly, if you lean on third-party data vendors to complement your in-house data, those vendors’ limitations may introduce uncertainty into the process. The vendors’ own data sources may not be upgraded consistently or frequently, and may be siloed across sources. They may also draw on data (such as credit bureau reporting) that doesn’t necessarily contain information that’s pertinent to your claims process and decision-making (as with the collections industry, you may find it helpful to reevaluate your data vendors periodically).
Differentiating between legitimate and fraudulent claims often involves identifying inconsistencies in the data surrounding a claim. If the data at your disposal is inaccurate, incomplete, or outdated, that’s a substantial handicap for your claim fraud detection teams.
Finding the Balance: Speed, Accuracy, and Compliance
An emphasis on quick claims resolution makes the corresponding needs for accuracy and thoroughness all the more challenging. Similarly, the shortcomings of legacy data providers, as detailed above, can impede your efforts to review flagged claims more efficiently and minimize the number of escalations.
Additional next-generation data tools, like Spokeo for Business, can help support claims review and fraud investigation workflows. Spokeo draws on a broader range of public record and commercially sourced datasets than many legacy vendors, providing additional contextual data for investigations. Using its powerful application programming interface (API), additional contextual data can be reviewed alongside existing fraud signals when a claim is flagged for investigation.
The usability of open source data will vary with the jurisdictions where you operate, because there is no single, broad-ranging federal statute covering data privacy. Instead, there’s a patchwork of state and local ordinances, and compliance with those is built into your workflows and personnel training. Spokeo’s administrative console provides easy auditing and monitoring capabilities for managers to document how the product is used, making compliance straightforward, transparent, and easy to document.
The Importance of Better Data Context
Securing access to better contextual data is increasingly important for helping investigation teams review claims more efficiently. For example, in a synthetic fraud scheme, fabricated and mismatched data elements often become easier to spot when investigators can review broader contextual information.
If key data elements associated with the claim conflict with one another or with other information tied to the account, that may be a strong signal that further investigation is warranted.
In the same way, corroborating data can help investigators assess whether a claim’s circumstances appear consistent. A claim that’s flagged because it’s filed from outside of the policyholder’s usual geographic location might prove valid if it turns out that this other location is where the claimant’s extended family is based, for example. Good data tools can help investigators gather additional context around these patterns.
It’s important to note that the absence of this kind of corroboration isn’t necessarily proof of fraud. If your data for a given claimant showed little or no connection to some important detail of the claim, it is legitimate grounds for concern. It might indicate impersonation fraud or an account takeover, for example, but it’s grounds for further investigation, not a denial. Your fraud team could escalate to a review of additional publicly available data sources, where appropriate and permitted, to gather more context for the investigation.
Fast, Accurate Claims Processing Demands Modern Tools
Digital-forward claims processes have been an unquestioned win in the marketplace, making it easier than ever before for policyholders to file a claim. Criminals have taken full advantage of the same new processes to defraud insurers, exploiting gaps and shortcomings in the data available through legacy vendors.
Modern tools like Spokeo for Business can help claims and fraud teams investigate suspicious activity more efficiently by providing broader contextual data, equipping your claims and fraud teams to do their work more efficiently, reducing leakage, and improving the user experience for legitimate claimants. Reach out today to learn how Spokeo for Business can support your claims review and fraud investigation workflows through broader contextual data and integration with your existing systems.
Spokeo for Business provides access to public record and commercially sourced data that may support fraud investigation and claims review workflows. It is not a consumer reporting agency as defined by the Fair Credit Reporting Act (FCRA) and does not provide consumer reports. Customers are responsible for ensuring their use of the data complies with all applicable laws and regulations.
Sources
National Insurance Crime Bureau (NICB): NICB Projects 49% Rise in Insurance Fraud Linked to Identity Theft in 2025
IBM: What is Data Reliability?