How NLP Aids in Insurance Fraud Detection

By Insurance CIO Outlook | Tuesday, March 10, 2020

NLP enables insurers to extract useful business insights from large data sets, thereby simplifying the process of fraud detection.

FREMONT, CA: The three essential considerations that must be addressed to excel in the insurance industrial world are understanding the customers' needs, timely customer outreach, and identification of fraudulent claims. Insurance firms employ thousands of agents, brokers, marketers, claim investigators, and support personnel to address them. The firms also deploy various technologies and IoT devices to collect copious amounts of data. Although the data assets are a big advantage for the insurers, having so many data resources can result in chaos. This is another aspect that is making the insurance industry overly data-centric.

The insurance industry derives a major chunk of its data resources from social media. Such data can be classified as conversational data. It is challenging for the insurers to extract business-specific data from the sea of conversational data. Natural language processing (NLP) is one technology that can address this challenge.

NLP in insurance can be sub-divided into two categories: Sentiment analysis and text mining. Sentiment analysis locates and extracts sentiment from online materials. It identifies the subjective information and insights from a source message or document, enabling the organizations to monitor social media in real-time. On the other hand, text mining offers powerful methods to explore and analyze unstructured data to identify previously unknown patterns and concepts. Such pattern identification capabilities can be leveraged by insurers to detect insurance fraud.

Insurance firms are already using NLP to mine the details present in insurance documents, applications, adjustor notes, and various unstructured text sources. NLP can also aid a special investigative unit (SIU) within insurance to detect fraudulent cases and fast processing of genuine claims. Overall, NLP is a crucial asset for the insurance firms that are eyeing for a secure and efficient business operation.

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