Cost of Not Investing in Fraud Control Measures for Insurers

Abstract

The cost of fraud management shouldn’t be seen only as saving of the initial loss,

rather as the cost of multiple, untraced, exponential, mastered events, before it

becomes too big to eradicate. The article depicts the psychology of fraudster -

• Fraud?? No!! It’s my ROI.
• Isn’t it just a victimless crime? A “low hanging fruit” or
• Deep pockets of insurers’ won’t even know!!

           and insurer’s dilemmas -

• How to pick a fraudster?
• Isn’t it “cost of doing business”?
• Monitoring the utility of fraud management

The article presents case studies and mathematical models, for a prudent and

economical view on this topic.