Analytics is one of those technologies that is changing the way companies do business. While call centers have been using them for some time – to detect problematic calls or pinpoint the causes of customer churn – many other types of industries have found value in analytics.

The Internal Revenue Service (IRS), for example, has been using analytics to combat tax fraud for years. The solutions can search for patterns and look for “breaks” in the pattern: a claim filed immediately when the taxpayer normally files on the deadline, for example, or a telephone number that doesn’t match an address. Fraud detection processes that used to be done manually (which meant that much was missed) can now be carried on by computers running analytics solutions, and these systems can uncover evidence of fraud that humans would be likely to miss.

Another industry that is beginning to rely heavily on analytics is the insurance industry. While most insurers use analytics to some degree, UK-based research group Ovum (News - Alert) recently stated that most companies efforts’ simply aren’t enough anymore, particularly if those solutions are a few years old. It’s also critical, says Ovum, to use analytics in all areas of the insurance business and not just claims processing.

“A current focus mainly on the claims phase, insurers must reassess their fraud strategy and how technology is currently being utilized to combat the growing threat,” writes Ovum. “Customer-interaction points including policy application and underwriting in addition to claim notification must be taken into account to improve the effectiveness of fraud systems.”

Insurance fraud, once largely the provenance of individuals, is now taking on organized crime aspects with large, well-funded and technologically-savvy groups engaging in the practice.

Ovum’s says its most recent research shows that a number of technologies, including link analysis, text mining, and predictive analytics, have evolved to the extent that they now enable insurers to address the increasingly serious threat posed by professional fraud networks.

“This technology will become increasingly ‘adaptive’, enabling insurers to detect and respond to new and constantly changing techniques used by fraud criminals,” said the analyst group.

While many insurers may believe that human fraud detection or analytics solutions that meet minimum standards could do the job when it came to crimes attempted by individuals, it seems clear today that with the increasing rise of organized insurance fraud, companies without advanced analytics are likely to lose, and lose big.