Why AI Needs Human Interaction

Artificial Intelligence or AI is used to describe a computer’s ability to quickly recognize a situation that has been pulled from large swaths of data that the human brain wouldn’t be able to analyze in nearly the same amount of time. This new technology is now used in a number of industries, one being insurance fraud detection.

Why Is AI So Important for Insurance Fraud Detection?

A client submits a claim for a stolen laptop. He attaches proof of ownership, bank statements and receipts of the purchase, and even a photo of his laptop. If a claims handler wouldn’t use the help of an AI-powered system, he or she would have a hard time seeing that the purchase date on documents was skilfully altered, as well as the price of the original purchase. Moreover, the AI flags out that the same image can be found on the internet. Within seconds, these triggers make up a score. It signals the claims adjuster that something suspicious is happening. As these kinds of situations can happen hundreds of times per day, it becomes impossible to scale the business without the help of AI solutions.

Typically the price of an insurance policy would have to outweigh the amount of money taken by fraudsters. The total cost of non-health insurance fraud in the US is $45 billion per year, FBI estimates. For an average US family, this means $400 to $700 dollars more in increased yearly premiums. Without AI and with fraudsters getting more innovative, more fraudulent claims could pass unnoticed which is why so many insurance carriers have made it their mission to embark on digital transformation journeys and start fighting fraud with the latest technology on the market.

However, AI isn’t a one-stop-shop either. It’s important to combine it with the power of human interaction. AI is responsible for automating the recognition of fraud scenarios that insurers have already encountered, but we would be naïve to think that fraudsters don’t evolve over time. For that reason, AI isn’t enough on its own and there are other important factors for success.

Why AI Will Not Replace Humans (yet)

An experienced claims handler will probably tell you that they recognize suspicious behavior as easily as they recognize a cat. And, rather than artificial, it is their human intelligence that enables them to discover new fraud scenarios. This is the most important element of integrating new technology, incorporating real-world experience. The adjuster understands anomalies and discovers suspicious links because the irregularity, compared to everything else they’ve seen, allows them to easily highlight a dishonest claim. So, once they’ve pieced together a new fraud scenario, they can input that information into a machine, which will begin to recognize the scheme and check for it on future claims.

Throughout this process, human remains essential in detecting these new scenarios. AI is created to solve specific problems within a given environment. But humans are the ones that give insights and make connections between different sorts of problems. A hybrid approach of human expertise and predictive modeling should be seen as an essential element in preventing losses and giving insurers an advantage when it comes to identifying the ever-changing patterns of fraudsters.

An effective fight against fraud cannot exist without human knowledge. Insurers have to remember that they cannot jump directly into digital transformation and leave humans behind. Machines are not yet capable of doing the job for them. Just like you wouldn’t expect a cat to play fetch, you can’t expect a computer to think like a human… yet. Do you want to learn more about AI in insurance? Check out our blog post “There Is More to CLAIMS Than Just AI.”