How AI Is Helping Canadian Insurers Detect and Prevent Benefits Fraud
The Canadian Life and Health Insurance Association uses AI to detect group benefits fraud by analyzing pooled data from insurers. This helps reduce costly false claims and protect benefit plans.
CLHIA Leverages AI to Detect Insurance Fraud in Group Benefits
The Canadian Life and Health Insurance Association (CLHIA) has partnered with Paris-based Shift Technologies to use artificial intelligence for identifying insurance fraud in group benefits plans. This move aims to strengthen fraud detection across the Canadian life and health insurance industry.
Understanding Benefit Fraud
Benefit fraud occurs when either a plan member or a service provider submits false information intentionally to a carrier for financial gain. A rising trend is collusion, where both parties collaborate to submit fraudulent claims and share the payout.
Pooling Data for Industry-Wide Insights
Since 2021, CLHIA has been pooling deidentified data from various Canadian insurers. While insurers use their own systems to flag suspicious claims, Shift’s AI analyzes this combined data to detect patterns that might go unnoticed on an individual basis.
- For example, Shift identifies “impossible days” when a service provider submits the maximum number of claims they could physically handle in a single day across multiple carriers.
- This approach provides a broader, collective view of suspicious activities, enhancing each insurer’s ability to combat fraud.
The Cost and Impact of Fraud
In 2023, Canadian insurers paid $36.6 billion in supplementary health claims. Even if just 1% of these claims are fraudulent, it translates to hundreds of millions of dollars lost annually. Such losses threaten the sustainability of benefit plans.
Fraud-driven cost increases can lead employers to reduce benefit packages, which directly affects the support available to employees when they need it most.
Looking Ahead
Using AI tools like those from Shift allows the industry to connect data points across carriers, making it harder for fraudulent activities to go undetected. This collaboration strengthens the protection of benefit plans and helps maintain fair costs for employers and employees alike.
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