The FBI estimates that insurance fraud costs more than $40 billion per year or between $400 and $700 extra in premiums every year for every American family.
At Allstate, we know that the vast majority of our customers are honest, and that it is these hard-working families who pay the price for insurance fraud. As a result, we are committed to using all the tools at our disposal to identify claims where a strong likelihood of fraudulent claim activity is occurring.
We gather large amounts of data about the types, amounts and frequencies of claims through our claims reporting applications as well as external data, and we continually analyze the data to identify claims with potential fraud. Our fraud-related data and analytic capabilities have been developed and used by our Claims team in a manner that the California State Department of Insurance recently requested a demonstration.
We integrate the information we gather about potential fraud into other parts of our business, including Sales, Product development and Claims. Additionally, we incorporate data from across home and auto product lines into our analysis, so that information we gather in one business line can shape our decisions in another.
As a result, we have seen improvements in our ability to identify and fight fraud, particularly where large organized crime networks—including doctors, lawyers, repair shops and medical treatment facilities—are involved. Our reputation for being tough on fraud is viewed as a deterrent. When criminal networks know that we will allocate staff to investigate fraudulent claims and the risk is high in divulging their schemes, they direct their efforts elsewhere.
Improvements in the homeowner space and in medical abuse have been less dramatic, but we believe that we are identifying more suspect claims.