Insurance services outsourcing – can help reduce insurance fraud
Insurance services outsourcing – can help reduce insurance fraud
August 26, 2009
Most people relate insurance services outsourcing to cost savings and efficiency improvements and although they may not be entirely wrong, there remains a lot more that they need to know about the benefits of insurance services outsourcing. For instance, it may be common knowledge among insurance companies and tpas (third party administrators) that insurance services outsourcing helps reduce the instance of insurance related frauds, but the same information may not be available to the general public. Let’s shed some more light on this less-publicized benefit of insurance services outsourcing and see if we can determine how advantageous it really is.
Insurance services outsourcing makes it difficult to seek inside information
In the majority of cases related to insurance fraud, it has been noticed that the perpetrators had sought help from someone on the inside. It was easy for them to get inside support because in most cases, critical processes such as claims assessment and settlement were being carried out through an inhouse unit located in the home country. With insurance services outsourcing, things however have become a lot more safe because most insurance services outsourcing firms operate from offshore locations, thousands of miles away from the home country. Technological advancements may have diminished geographical boundaries, but since cultural and language issues still prevail, planning and executing insurance frauds has become a lot more difficult now with insurance services outsourcing.
Insurance services outsourcing firms are more alert and concerned
insurance services outsourcing firms work on low-profit margins and since they cannot afford to lose outsourced projects due to a bad reputation earned from a fraud committed on their premises, most of them are extra cautious while handling outsourced insurance processes. Installing advanced security systems and making use of automated fraud detection systems has become a common practice among insurance services outsourcing firms. All of these help outsourcing firms to reduce risks related to insurance frauds and provide that much-needed peace of mind to insurance companies and tpas alike.
Insurance companies and tpas that have chosen insurance services outsourcing are witnessing a dramatic drop in the number of fraud cases related to their insurance products and services. Other reasons may also be responsible, but if there is no second or third prize, the credit should certainly go to the winner, i.e. the insurance services outsourcing industry for its significant role in reducing insurance fraud.
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