9.6 Death Claims That Did Not Add Up: A Case Study


9.6 Death Claims That Did Not Add Up: A Case Study

A major insurance company was concerned with finding patterns in death claims that occur within and shortly after the two-year contestability period. During this time frame, the insurance company has the right to contest benefit payments. Therefore, it is imperative that fraudulent claims be detected in a timely fashion.

This particular insurance company database consisted of over 100,000 policies. A traditional auditing tool was first used as a preprocessor to manipulate the files and sort the data according to date clusters. The contestability date was selected and the period two years before (back to the issuing date) and two years after formed the total four-year period of interest. The data was sorted into six-month clusters or a total of eight clusters over the four years, and the records containing death claims were selected. Each resulting cluster of interest consisted of an average of about 550 records.

Once the preliminary step was taken with a traditional auditing tool, Wiz-Rule from WizSoft was used to analyze the data. This firm also offers Wiz-Why, a data mining rule generator tool. WizRule is a data auditing application that automatically reveals all the rules in a given database and points out deviations and potential errors in the data. WizRule can search and find all the IF/THEN rules in a data set and calculate the level of unlikelihood of each deviation when analyzing a database. In the case of this insurance carrier, WizRule analyzed each cluster of interest for patterns in the data and for deviations.

Since WizRule finds all the rules and relationships in the data without requiring preknowledge of the auditor, interesting and unexpected results can be discovered. Among the unusual patterns detected by WizRule were cases where the death occurred in a state other than either the state of insurance or the state the decedent lived in during the coverage of the policy. In some cases, a pattern of foreign-issued death certificates pointed to a potential ring of fraud. These cases are currently under investigation by the appropriate agencies.




Investigative Data Mining for Security and Criminal Detection
Investigative Data Mining for Security and Criminal Detection
ISBN: 0750676132
EAN: 2147483647
Year: 2005
Pages: 232
Authors: Jesus Mena

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