Insurers use AI, data sharing and private investigators to clamp down on benefits fraud
Benefits fraud is rising - and the industry is adapting fast. One-fifth of plan sponsors (22 per cent) reported an uptick across plan members, providers, or organized groups, according to the 2025 Benefits Healthcare Survey. Leaders at the Toronto Benefits Summit called out a clear message: detection is improving, and the tools are getting sharper.
Fraud is widespread - and more visible
"I view benefits fraud like a scourge in the industry," said one insurer executive on the panel. While the 22 per cent figure is significant, the more important signal is improved detection. Better analytics and targeted investigations are pulling more cases into the light.
How carriers are responding
- AI and machine learning: Insurers are analyzing claims down to provider and postal code to spot anomalies in near real time.
- Data sharing: Carriers are collaborating through the Canadian Life and Health Insurance Association (CLHIA) to flag patterns and repeat offenders. See CLHIA's work on industry collaboration here.
- Investigations: Private investigators and external billing experts are being used to validate suspicious activity and tighten case files.
- Transparency: More communication with plan sponsors and publicizing bad actors is acting as a deterrent.
Provider community wants clarity
Provider associations are asking for clear guidelines on what insurers consider inappropriate or fraudulent. Many issues live in grey areas where intent isn't malicious but practices miss the mark. Webinars and shared resources - including materials from CLHIA - are helping set expectations before problems escalate.
De-listing vs. remediation
De-listing a clinic or practitioner is effective, but it's also blunt. It cuts off community access and can end livelihoods. Panelists raised the case for a structured path back for providers who made honest mistakes - think fines plus education - while maintaining a firm line on deliberate fraud.
What plan sponsors can do now
- Tighten your plan design: Use reasonable limits, pre-authorization on high-risk categories, and rolling audits on outlier spend.
- Lean into data: Ask your carrier for dashboards by provider, clinic, and postal code. Review spikes and clusters monthly.
- Close policy gaps: Update contracts to define prohibited practices and consequences. Align with carrier de-listing criteria and remediation paths.
- Educate employees and providers: Share simple examples of fraud vs. admin errors. Make the reporting channel easy and confidential.
- Coordinate with the industry: Encourage participation in insurer/provider education sessions and association programs.
Risk signals to watch
- High-concentration claims tied to a single clinic, supplier, or postal code
- Unusual billing patterns (identical amounts, time-of-day clustering, or same-day multiple services)
- Inconsistent clinical notes or templated documentation across many patients
- Member-provider relationships that suggest kickbacks or inducements
Why this matters
Fraud drains plans, pushes premiums up, and erodes trust across the system. Strong analytics, cross-carrier collaboration, and consistent education create leverage without compromising legitimate access to care. Insurers are signaling they will back plan sponsors who act decisively and fairly.
For fraud awareness resources, visit the Canadian Anti-Fraud Centre here.
Level up your analytics capability
If your claims, SIU, or benefits operations teams are building AI/ML skills for anomaly detection and case triage, explore practical training by job role here.
Full results from the 2025 Benefits Healthcare Survey are available from the event organizers. Look for additional panel insights as carriers and provider associations align on standards and remediation.
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