As benefits fraud schemes become more sophisticated, group insurers must continuously evolve their strategies to keep up to date, according to Shelley Frohlich, director of fraud risk management at Sun Life Financial Inc.
A group insurer’s role is to help protect the integrity of the benefits plan by reducing the financial and reputational risks to an organization. This is done through powerful anti-fraud tactics, said Frohlich during a session at Benefits Canada’s 2019 Benefits and Pension Summit in Toronto on April 17. “Raising awareness is one of the most effective approaches to fraud prevention.”
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Citing a 2018 Environics Research study, she noted 75 per cent of Canadians believe the only consequences of benefits fraud are premium increases or being required to return the money. As well, plan members continue to believe they’re stealing money from insurance companies, not plan sponsors.
“In every single [fraud] case, the employee has responded with, ‘It’s just the insurance company. I did nothing wrong to the university,’” said Terisa Ducharme, associate director of pension and benefits at York University, who also spoke during the session.
Fraud detection and prevention are critical in eliminating benefits plan threats, which ultimately translates into savings for plan sponsors, said Frohlich, noting the two main components of a secure anti-fraud risk management strategy are advanced data analytics and a well-trained investigative services team.
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It’s crucial that group insurers collect detailed claims data, which permits them to identify whether a certain plan sponsor is being targeted, said Frohlich. While analytics can identify abnormal behaviour, they can’t detect fraud, she noted, so investigators are then required to complete several steps to draw conclusions.
Delisting, when an insurance company no longer allows the services of a particular provider, is one intervention tactic once fraud is identified, said Frohlich. “By delisting, we’re removing threats from the benefits plans.”
Once the insurer has completed their fraud investigation, the plan sponsor is contacted, said Ducharme. In York’s case, the university then communicated delisted providers to plan members through their newsletter.
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While it may be the employee who commits benefits fraud, prevention starts from within the organization, with employers playing a vital role, said Frohlich. Strong partnerships between plan sponsors and group insurers are needed for effective anti-fraud strategies, she added. “Fraud reduction is a collaborative approach and cannot be accomplished independently.”