Uninsured risk has a vast welfare cost, not just on the short term basis, but also on the broader term of perpetuating poverty. There is no doubt that the Insurance industry is playing a vital role in improving the economy and also improving important economic indexes such as welfare.
In developing countries, for instance, Nigeria, The insurance industry is yet to be a major player economically contributing a meagre 0.7% of the total GDP in Nigeria according to a PWC report. It is safe to say that the Nigerian Insurance Industry has been performing sub-optimally.
This could be accorded to a series of problems facing Insurers in the country – a hostile economy, lack of awareness for those to be assured, lack access to information technology, Fraud, waste and abuse.
These several factors have greatly reduced the efficiency of services rendered by Insurers to the public.
In this article, we will focus on one of the problems facing the Insurance Industry in Nigeria. Fraud.
Fraud, Waste and Abuse (FWA) is the term used to describe both intentional and unintentional billing errors that end up costing insurers more money. According to Claims intelligence and clinical audits within a number of health insurance schemes in Africa, it reveals that 15 to 20 % of healthcare allocated funds are lost through fraud on a year to year basis.
This adds to the fact that the region of sub-Saharan Africa spends 6.1 per cent of its total GDP on health, it goes without saying that the Health insurance sector in sub-Saharan Africa and Africa at large is in a terrible state.
This YOY fraud costs insurers billions of dollars as well as deprives patients of the quality and affordable medical care they need.
The entire value chain of the healthcare insurance industries needs to adopt a more strategic approach towards mitigating the effect of FWA by implementing systems that can quickly detect anomalies, react to them and counter such anomalies through the use of technology such as Big Data.
Leveraging on information such as Patients records to Physicians certifications, Insurers can automate fraud detection using modern data analysis programs which can often detect fraud automatically.
However, this is not a walk in a park.
Analysing and training Big Data can take thousands of work hours, and due to the volatility of technology trends, complex regulations and legal shenanigans, most Insurers and healthcare organisations such as HMOs can still be at risk of fraud. Fraudsters will always look out for loopholes in these challenges to carry out their illicit acts.
Sometimes, these frauds can be unintentional. This is described as Waste and Errors at billing. A typical example is input errors from medical billing codes which could result in overcharging. Although this is not as harmful to the sector as deliberate frauds, it could affect patients’ trust and loyalty towards insurers. Effectively streamlining databases as well as designing AI systems to detect these errors can help reduce unintentional waste and overcharging.
In the past, managing the vast data of patients records and healthcare providers information has posed a serious challenge to the sector.
The advent of major digital trends such as higher computer processing power, cloud computing for storing records online as well as advanced analytics programs present in the 21st century have significantly improved how patients records are kept which translates to better services.
Insurers are major players in the healthcare industry, and to maximise profit, meet customer satisfaction and stay competitive, health insurance companies must leverage tools at their disposal. Working with data analytics companies focused on providing solutions to healthcare such as Data analysis to cloud computing can be a big step towards a broader digital transformation strategy for business growth and success.
Curacel is the number one Claims & Fraud Detection Platform in Africa. Curacel’s AI-powered platform enables insurers to automate claims seamlessly and also track fraud, waste and abuse (FWA).