IBM Smarter Analytics Solution for insurance


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Learn how IBM Smarter Analytics Solution for insurance helps Detect and prevent insurance claims fraud, waste and abuse. For more information on IBM Systems, visit

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IBM Smarter Analytics Solution for insurance

  1. 1. Solution Brief IBM Systems and Technology Group IBM Smarter Analytics Solution for insurance Detecting and preventing insurance claims fraud, waste and abuse Estimates put the cost of fraud to US insurers at tens of billions of dollars annually. Similar figures can be found for insurers worldwide. With fraudulent claims estimated to represent a significant number of all claims paid each year, prevention and recovery of fraudulent costs is a key goal for insurers. Today, methods of fraud, such as billing for more extensive services than those required or staging of accidents, have become more sophisticated. Organizations are under pressure to pay claims quickly and overburdened fraud investigators simply can’t keep up. Fraud not only results in revenue losses for insurers, it also leads to higher premiums for consumers. Insurers need a new approach to fraud detection and prevention that can help uncover new fraudulent schemes, recognize patterns of non-compliant behavior and identify businesses or consumers that are likely to commit fraud in the future. The IBM® Smarter Analytics Solution for insurance on IBM zEnterprise® uses sophisticated predictive analytics to identify potentially fraudulent claims before payment and reduce the number of false claims paid. The Smarter Analytics Solution helps address fraud-related challenges and can dramatically reduce costs from fraud and abuse. It helps organizations detect suspicious transactions before payment, minimize loss from overpayments, and recommend methods of intervention. Highlights: • Detect suspicious transactions • Analyze historical and real-time data • Integrate fraud detection with case management • Benefit from IBM software and IBM System z, optimized for insurance fraud workloads
  2. 2. Solution Brief IBM Systems and Technology Group 2 Unlike point solutions that address only a single step in the process or provide a simple “score,” the Smarter Analytics Solution integrates multiple capabilities to help combat fraud across the entire claims life cycle. It combines several analytical technologies and tools that help organizations: • Prevent fraud at the time of policy submission. • Predict fraud at the intake of claims. • Identify fraud during adjudication. • Discover fraud by examining patterns in data. • Investigate fraud more efficiently by reducing false positives and accelerating the investigation process. • Visualize trends and hotspots to continuously improve antifraud efforts. The Smarter Analytics Solution efficiently enhances the claims adjudication process without incurring business or performance penalties. The adaptive systems from IBM learn from the latest data, which helps to protect against emerging fraud. The solution embeds advanced algorithms directly into business processes, which gives insurers the ability to detect fraud in real time before funds are paid out. Using sophisticated analytics, the solution recommends the most effective remedy for each case, which helps to optimize an organization’s finite resources. For example, the system might recommend that a simple letter requesting payment be sent to resolve one case, while recommending that a full investigation be opened in another case. Detect suspicious transactions To detect fraud, you need to determine what constitutes “normal” behavior versus those behaviors that are “different” or “bad.” Identifying how these “outliers” behave relative to other businesses or consumers can help you identify fraudulent activities. If you can detect fraud before paying out funds, you can reduce recovery expenses for fraudulent claims. Facing heavy caseloads and policyholder expectations for fast claims processing, many adjusters are able to spot fraud only in obvious cases. By examining public and internal data in the background, the Smarter Analytics Solution can help provide real-time alerts to adjusters when it detects questionable behavior, communications or relationships. The Smarter Analytics Solution uses a wide array of tools to: • Validate the identities of all parties involved. • Analyze relationships among parties, including parties involved in other claims. • Scrutinize structured and unstructured data associated with the event. • Monitor social media to identify inconsistencies compared with claim details reported to the carrier. • Analyze historical and real-time data. Business analytics are designed to identify patterns in data. At an insurance organization, after you have detected fraudulent schemes, patterns of non-compliant behavior or even criminal activity, the next step is to use predictive analytics to identify others that are behaving in a similar fashion. Advanced analytics capabilities built into the Smarter Analytics Solution help you evaluate and analyze real-time as well as historical data. When you discover groups of businesses or consumers that are behaving the same way, and are likely to behave badly in the future, you can isolate the indicators that show whether or not a business’ or consumer’s behavior is getting worse over time. The Smarter Analytics Solution embeds advanced algorithms directly into business processes, which gives insurers the ability to detect fraud in real time and before funds are paid. The solution actually “learns” from the latest data, which helps protect your organization from new approaches to fraud. Once claims are confirmed as fraudulent, it is possible to examine all data associated with these claims to discover common patterns in content and relationships. By leveraging the IBM Loss Analysis and Warning System (LAWS) and IBM SPSS® predictive analytics software, insurance companies can discover these patterns and apply them to the entire population of claims, increasing the potential to discover fraudulent claims.
  3. 3. Solution Brief IBM Systems and Technology Group 3 Integrate fraud detection with case management Many insurers use the zEnterprise system to support their claims processing and adjudication. When your operational data and/or data warehouses are housed on IBM System z® in close proximity to each other, you can take advantage of workload-optimized fraud detection capabilities on zEnterprise. Running analytics in close proximity to related data avoids data proliferation across multiple systems and can enable faster response times with fewer compute resources and reduce potential security exposures and outages. In addition, the data used for real-time analysis is more accurate, resulting in fewer “false positives.” In some cases, compliance issues can arise if claim payments are stopped without sufficient reason. Reducing false positives will significantly improve confidence in claims that are stopped for further investigation of potential fraud. This tight integration with transactional systems (where claims data and processes typically reside) can also produce performance benefits, better resource management and workload assessment. By integrating fraud detection with case management, you can more effectively prioritize claims based on value, the likelihood of appeal and other factors. You have the flexibility to move from post-payment analysis to pre- payment fraud detection without affecting efficiency and performance targets for claims adjudication rates. Additionally, when you deploy the Smarter Analytics Solution on zEnterprise, you can incrementally enhance claims processes with predictive analytics building blocks, eliminating the need to extract, transform and load the data into yet another IT environment. Benefit from IBM software and System z, optimized for insurance fraud workloads The Smarter Analytics Solution is well integrated across all layers, embedding the industry-proven fraud detection models and capabilities of the IBM Fraud and Abuse Management System (FAMS). In addition, it brings the unique characteristics of healthcare fraud workloads together with IBM software and System z software for optimal performance. SPSS predictive analytics software and System z servers deliver a highly optimized analytics environment that can take advantage of new IBM DB2® on IBM z/OS® and SPSS Modeler functionality in close proximity to data that resides on System z. z/OS DB2 technologies for scoring and temporal data combined with SPSS scoring capabilities are a powerful combination. Models can be scored and updated in real time at the time of the transaction, allowing data from current transactions to be factored into the analysis along with historical data. Combining SPSS predictive analytics capabilities with System z means a higher percentage of fraudulent claims can be detected before payment without negatively impacting claims processing efficiency, which further reduces recovery costs. SPSS scoring algorithms perform mathematical calculations that require an advanced floating-point architecture. The zEnterprise system is designed to optimize this type of analytic computation with improved hardware, compilers and one of the industry’s fastest processors. The zEnterprise system supports clustering technologies that allow multiple servers to work together to provide 24-hour a day operations for years. Clustered servers can be miles apart, eliminating the possibility that your fraud and abuse solution will be unavailable because of local site problems, electrical disruptions or system maintenance. The Smarter Analytics Solution is capable of dynamically moving applications across clustered systems to ensure accessibility to the underlying data, so your staff remains productive without experiencing unplanned outages.
  4. 4. Solution Brief IBM Systems and Technology Group 4 ZSS03071-USEN-00 Please Recycle © Copyright IBM Corporation 2012 IBM Corporation System and Technology Group Route 100 Somers, NY 10589 Produced in the United States of America August 2012 IBM, the IBM logo,, System z, z/OS, zEnterprise, DB2, and SPSS are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON- INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. The System z environment is a world-class database and hardware platform that is optimized to deliver performance, flexibility and scalability for the most complex analytics applications. It can dynamically add capacity without major technology replacements or migrations. You can purchase additional capacity for deployment, without sacrificing data availability. A centralized environment can help eliminate unused capacity that is costly to purchase and difficult to manage. When you centralize your information infrastructure onto a single zEnterprise or cluster of System z servers, you can maximize your return on investment and ensure a cost- efficient infrastructure. With the robust, easy to scale and manage infrastructure, your fraud and abuse solution can remain accessible without compromising staff productivity. Together, the zEnterprise platform and SPSS predictive software make it possible for data from current transactions to be factored into analysis in real-time. Why IBM? IBM has worked with insurers for decades to develop and evolve an optimal approach to fraud detection. The Smarter Analytics Solution builds on this proven experience and technology and is backed by a comprehensive array of data management and business analytics tools from IBM that take the guesswork out of making claims-related decisions. IBM offers a unique combination of business analytics products, solutions, services and experience that can help you develop a roadmap to create business value with analytics. The zEnterprise platform including the hardware, z/OS environment, DB2 database and SPSS predictive software makes it possible for data from current transactions to be factored into analysis in real-time. The system can detect a higher percentage of fraudulent claims before payment without negatively affecting your claims processing efficiency, which reduces your recovery costs. For more information To learn more about the Smarter Analytics Solution for insurance, please contact your IBM representative or IBM Business Partner, or visit: