On August 16-20, 2021, RGA hosted the ninth annual RGA Fraud Conference, the insurance industry’s premier cross-functional fraud prevention event. This year’s digital conference, which was translated into more than 15 languages and shattered attendance records, tackled the industry’s most urgent fraud-related issues: the latest in schemes, detection techniques, and approaches to preventing pervasive insurance and financial fraud. The event concluded with a panel discussion, titled “The Ever-Evolving World of COVID-19 and Fraud and Its Impact on the Insurance Business,” featuring some of RGA’s top fraud experts from a range of disciplines. Below are some collected insights pulled from that discussion.
Larry Ryan, Vice President, Group Re Claims and Treaty Development
The biggest impacts COVID-19 has had on my team’s work as it relates to fraud can be broken into four main areas:
We’re just scratching the surface of the ways we can apply digitization and analytics to fraud detection.
Many insurers are now capable of leveraging their own claims-handling experience to utilize digital tools in identifying fraud red flags, while others are turning to reputable vendors that offer these services.
One of the big challenges in health claims in the past year and a half has been adapting to the changes in medical care. In the early days of the pandemic, limited access to treatment resulted in a corresponding drop in health insurance claims. As hospitals reopened, a catch-up phase created a backlog for claims teams. Delays in access to medical records coinciding with increasing volumes of claims – all while still working remotely – is driving this backlog. Claims investigators are having difficulty getting responses to record requests from overworked healthcare workers. As a result, insurers are changing claims investigation and documentation standards, creating a prime environment for fraud. The most frustrating part is that the information we need almost certainly exists in an electronic health record somewhere – healthcare providers record everything so they can bill for it. The Holy Grail of claims adjudication is establishing systems to access electronic health records.
Long COVID-19 presents another big challenge. Since we don’t understand it yet, there is no standard for medical care, which is required for policyholders to receive insurance payments for treatment. Overall, we have seen remarkable knowledge-sharing worldwide of best medical practices as they are developed. Unfortunately, we are also starting to see some abusive practices.
The Holy Grail of claims adjudication is establishing systems to access electronic health records.
In one recent example, some healthcare providers were referring all long COVID-19 patients for speech therapy. While there may be cognitive impairment requiring such therapy for some patients, it almost certainly is not appropriate for all. It underscores the importance for insurers to stay current with medical advances and standards of care for long COVID-19 going forward.
From an underwriting perspective, anti-selection is not a new phenomenon. Yet the COVID-19 pandemic’s disruption of traditional processes and sources of evidence has led to expanded use of new, non-traditional underwriting tools and data, along with a reduction in requirements, which could open the door for a new wave of anti-selective behavior. Companies have had various responses and adopted various tools, so anti-selection will impact different carriers in different ways. It is important to remember that we’re in a new environment using new evidence, so we’ll need time to fully understand the impact on mortality risk assessment.
The digital age is providing new tools to help insurers detect fraud as well as new pathways for fraudsters to exploit. On the positive side, immediate access to a growing set of database sources is extremely useful. Consider prescription data checks, for example, which can help identify medications an applicant may not have disclosed, dates of impairment, compliance with treatment, and more. Newer sources of evidence such as digital health data, credit data, and medical billing data offer even greater possibilities.
The digital age is providing new tools to help insurers detect fraud as well as new pathways for fraudsters to exploit.
Yet fraudsters are always looking for new chinks in our armor, and new tools often come with new openings to exploit. As we move forward, we need to be just as nimble and creative as they are if we want to stay ahead.
Remote work brought on by COVID-19 has impacted fraud investigation in many ways as we move from traditional evidence to digital and alternative forms. With litigation, it usually takes a longer time for the effects of these changes to bear out in case law and regulatory decisions. Our industry is evolving, and we need to be proactive in identifying and promoting reliable alternative forms of evidentiary truth as traditional forms become inaccessible. This will require educating judges, arbitrators, and regulators on these new forms of evidence.
Another important legal consideration is the likely increased difficulty in challenging and litigating a fraudulent life insurance claim when the stated cause of death is COVID-19. Much of this will hinge on the issue of primary cause of death vs. comorbidity. If COVID-19 is listed as the primary cause of death, the insurer may be handicapped, as this is often considered the most important piece of information, and in many contexts, it is incontrovertible. We may see an increase in insurers rescinding or denying fraudulent COVID-19 claims based on misrepresentations in the application or claims process.
Our industry is evolving, and we need to be proactive in identifying and promoting reliable alternative forms of evidentiary truth.
Claims professionals will need to follow the same intuitive process we always have: If something seems amiss or out of the ordinary, look into it. Fraud litigation is always fact-intensive, and this will continue to be true in the COVID-19 context.
From the medical side, it is important to acknowledge how much we still don’t know about COVID-19 and to continually seek to learn more. Long COVID-19 is one example. Reaching consensus on the diagnostic criteria for post-acute sequelae of SARS-CoV-2 (PASC) and determining how this may affect people’s functioning and the potential impact on disability claims are just some of the challenges we face. But to serve our customers appropriately and ethically, we must defer to the likelihood that many people are suffering and may be unable to perform all their functional activities, including work tasks for a period of time. We should be empathetic and apply the same principles we use for other impairments for which we don’t always have objective criteria. I compare the current COVID-19 situation to the Lyme disease claim wave we saw several years ago – when even doctors disagreed over diagnostic criteria and standards of care.
To serve our customers appropriately and ethically, we must defer to the likelihood that many people are suffering and may be unable to perform all their functional activities, including work tasks for a period of time.
With new data continually emerging, we need to be prepared to change and cannot become complacent.
I often use an analogy to describe our industry’s COVID-19 experience. When the pandemic began, we thought of it as a single rock being thrown into a calm pond – a single center from which waves emanated. We have come to learn that it is instead more like throwing a handful of small pebbles into a pond: We don’t see one set of waves, but different sets of waves at different times and in different parts of the pond. The key is to remain actively learning and flexible enough to apply those learnings as more pebbles hit the surface.
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