Insurance fraud investigation using Linkurious

March 22, 2018

In the US alone, insurance fraud costs companies between 40 and 80 billion dollars each year. Being able to detect fraud schemes before fraudsters steal anything is critical for insurance companies.

Yet, the detection and investigation processes remain difficult for these institutions. Most of them simply lack the appropriate tools to detect and investigate complex fraud schemes hidden in large volumes of data.

Linkurious Enterprise is designed to help investigators expose fraudulent activities within large volumes of data. In this post, we take a look at property damage claims and show how to detect suspicious patterns and investigate insurance fraud cases with Linkurious Enterprise.

Insurance fraud schemes

Insurance fraud is rarely the work of an isolated individual. Fraudsters usually form complex networks that are difficult to detect for insurance and financial institutions. One of the most common techniques used by fraudsters is the following:

  • forge fake identities,
  • file several claims,
  • and cash the insurance checks.

Creating fake identities requires to forge or usurp personal information (social security numbers, addresses, credit cards, etc), to submit to insurance companies to become a customer. Forging new information for each fake identity they create comes at a high cost for fraudsters. This is why fraudsters often recycle this data to create several fake identities.

Insurance fraud scheme
Fraudsters recreate fake IDs from stolen customer data to file claims to insurance companies.

Using graph analytics to spot insurance fraud

Typically, insurance companies rely on relational databases (RDBMS) to store their customer data. Those systems, designed in the ’80s to codify paper forms, store data in tabular structures.

But rather than considering it as tables of information, we can consider the data collected by insurance companies as a graph. A graph where each piece of information (SSN, address, profession, claims) is a node, and where each node is connected to others through edges.

Insurance data is, by nature, connected: “customer A is connected to address A and customer B is married to customer A”. And detecting fraud is often about spotting connections that should not exist: “Customer A is connected to the same SSN than customer B”. By adding the “connection” dimension into our data with graphs, we make it easier to spot suspicious fraud insurance patterns in large datasets.

insurance fraud network example
A graph approach can help us spot suspicious connections

The picture above shows two customers and their connections. Each customer has a unique personal address, phone number, and email but somehow they share the same SSN number, which is normally unique for each individual.

Limits in current fraud investigation tools

Almost all the fraud detection and investigation are backed by the relational database systems mentioned above. RDBMS remain one of the best tools for storing and organizing data.

Yet, when it comes to querying and visualizing important amounts of connected data, RDBMS do not perform well and often lack important features:

Anti-fraud tools are dependent on these limitations. And all of these issues make them difficult to use for fraud, where analysts need to identify and investigate suspicious connections quickly.

Because it relies on graph databases, Linkurious Enterprise makes it possible to overcome these.

Its graphical interface simplifies the job of analysts and allows them to leverage the power of graph databases like Neo4j.

Investigating suspicious looking patterns in data with Linkurious Enterprise is fast for analysts and can be automated. Without previous knowledge of graph analysis, teams can carry out complex investigations to spot insurance fraud cases.

Visualizing insurance fraud with Linkurious Enterprise

Linkurious Enterprise provides a user-friendly web interface to visualize and interact with graph data. Analysts visualize and understand how different entities are connected. This offers several advantages for them, among which: faster comprehension of data and higher chances to discover fraud cases.

Here is what a ‘normal’ insurance customer looks like in Linkurious Enterprise. The customer is connected to a claim, a social security number, a phone number, an email address, and an address. We can see that he doesn’t share any of his personal details with other existing customers or known fraudsters. A lawyer and an evaluator are connected to the claim.

insurance data visualization
A normal looking customer data in Linkurious Enterprise

In a glimpse, it’s possible to understand that 8 different entities are connected and assess that the situation seems normal. As an analyst, this picture can be used as a “template” that will make identifying fraud cases easier.

graph data visualization
A visual display in Linkurious Enterprise of 500 hundreds pieces of customer information

The human brain identifies pattern variations quicker through a visual display so, even with larger volumes of data, we easily spot patterns differences. This situation should thus directly attract the attention of a skilled analyst that can immediately take a closer look.

Automate the detection of suspicious patterns

Detection systems backed by relational technology will be able to trigger alerts based on tabular rules and thresholds. This is the first step, but it is not enough in the face of complex, intricate, fraud schemes. With Linkurious Enterprise alert management system, you can automate the detection of numerous real-life fraud patterns, such as a ring of several fraudsters using layers of fake identities to make claims. Graph query languages such as Cypher or Gremlin serve as a basis for describing complex scenarios. Linkurious Enterprise then reports all the occurrences of that scenario for analysts to assess.

In this very simple example, the system will search for scenarios where customers are sharing common personal information.

cypher queries
Automating pattern detection in Linkurious Enterprise using Cypher queries

Analysts get a list of occurrences of that scenario in the data in real-time, ready for review. Linkurious Enterprise has a variety of styling, captioning and filtering capabilities to improve the reading of graph data so analysts understand the situation in the blink of an eye.

alert visualization insurance fraud
Visualizing an alert result to assess a potential fraud

If we take the first example, we understand quickly that those two customers sharing an address also have the same last name. We are probably looking at a couple. The situation is normal. The investigator can choose to dismiss the case or open a low priority investigation.

Linkurious Enterprise helps save precious resources, and avoid customer dissatisfaction.

Analysts will spot fraudulent situations as quickly as they assess potential false positive.
In this new match from the alert, let’s look at three new customers and the property damage claims they are connected to.

insurance fraud ring
Visualization of a potential insurance fraud ring.

These claims are under the supervision of the same lawyer and the same evaluator. Curiously the two customers that instigated the three property damage claims, John Piggyback and Werner Stiedemann, are both linked to a third existing customer, Paula Smith. Piggyback has the same phone number and Stiedemann the same email address as her. This is an abnormal situation as neither of the two share her name or address.

This situation is very likely to be insurance fraud. The fraud investigators can export its findings from Linkurious Enterprise to fill in a report to block the transactions for all three cases, or share the visualization with a colleague to further the investigations.

Linkurious Enterprise brings the power of graph to fraud analysts through an intuitive investigation interface. They leverage alerts to detect and assess real-life data scenarios of fraud situations quicker than ever.  Analysts focus on the visual investigation of the most complex cases to prevent damages and preserve the customer experience. With Linkurious Enterprise, they collaborate to dismantle entire fraud networks at once and share intelligible reports to authorities.

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