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Wednesday, April 26, 2023 - 13:23

Group insurance fraud costs group plan sponsors $400 million a year or more

Woman in lab

Empire Life and CLHIA highlight fraud prevention in group insurance market

Stephen Frank, President and CEO of the CLHIA, says fraudsters are mounting more sophisticated schemes, and that the industry has adjusted, as a result. “We’re putting more resources into fraud prevention and detection, we’re investing more in technology, and generally spending more energy on combating fraud collectively across the industry. Empire Life has been a huge partner in that, and really a driving force on helping us get to where we are,” said Frank. While it’s difficult to pinpoint the precise dollar amount lost to fraudulent group benefit claims, if just one per cent of total claims paid is fraudulent.the total amounts to more than $400 million a year That’s according to data published by the Canadian Life and Health Insurance Association (CLHIA). 

March was fraud prevention month. This year, Empire Life engaged with employees and business owners via its social media channels, and hosted an advisor webinar to discuss trends and the tools Empire Life uses to detect and prevent fraud. “Enlightening,” “excellent,” and “useful content to discuss with clients” are some of the reactions advisors posted following the webinar. 

Webinar guest speakers, Raman Sharma, Claims Investigation Analyst and Richelle Feddema, Manager Group Health Claims at Empire Life, explained how artificial intelligence and machine learning support the Empire Life team by systematically scoring claims, recognizing and reporting suspicious patterns, as well as profiling plan members, providers, and social networks. Empire Life is competitive in the industry on fraud management, said Sharma. “We've implemented all of the necessary tools and are utilizing each and every resource that is available to combat fraud. At the same time, it’s critical that the fraud detection program continues to evolve as new technology is available.”

Webinar guest speakers all stressed the need to build greater awareness about fraud. CLHIA research reveals that seventy five percent of Canadians believe the biggest consequence of committing benefits fraud is having to pay back false claims or pay a higher premium. “But it is more than that,” said Sharma.”If you are caught committing fraud you can lose your job, face fines, or even jail time and a criminal record.” Unchecked fraud can also challenge the sustainability of a benefit plan and result in increased premiums.

Tips for plan members

You wouldn’t pay a credit card bill for something you didn’t buy, would you? The same logic applies to benefits plan—no one should pay for bogus claims. Left unchecked, fraud hurts us all by driving up benefit plan costs. 

7 ways to help protect your benefits plan from fraud and abuse

Download the plan member flyer and the plan administrator brochure.

Read our blog featuring an interview with Stephen Frank.