I don’t like fraud!
I have written before about fraud in general and fraudulent insurance claims in particular. You may recall that I have also mentioned that Barry Zalma shares my passion about this and there are a lot of tips on a recent blog of his. Some of them are more relevant to big businesses, whist I generally aim my advice at small to medium sized ones, but a lot of the same principles apply. For more on this and some examples of scams and fraudulent insurance claims go to Zalma’s Insurance Fraud Letter. I am pleased to note that Barry agrees that such controls form part of an overall Risk Management strategy and this is one risk we all need to manage.
Do control measures cost more than they save?
I have always believed measures against being defrauded were worthwhile, especially as some are not expensive, anyway. Now I have discovered that there is evidence to prove it, as the Association of Certified Fraud Examiners has compared the losses incurred by organisations that had control measures with those of organisations that did not. Their data was broken down by categories of control measure and showed that all the measures proved cost effective.
What are the most effective measures against fraud?
The above research identified two measures as the most cost effective :
- Surprise audits.
- Data monitoring
Together they produce on average a 50% reduction in the cost of fraudulent claims. What are you waiting for? If you don’t have those two controls, introduce them asap or speak to me for advice on implementing them.
I will be writing about this again, giving details of more measures you could consider.