Jerry Chetty

Myths About Data Investigation

THE WORLD WE LIVE IN Speaker 3 of 17

Followed by

Gary Hope

@4JerryC

Facts about fraud

•  Fraudsters do not discriminate •  No organisation is immune from fraud •  It’s not about if, but rather when

•  Fraudsters love big data – the more, the merrier! They use big data to camouflage their fraud!!!!

Investigations in data heavy industries

INDUSTRIES WHO CARRY AND PROCESS BIG DATA The following are some examples: •  Banks •  Telecommunications •  Retailers •  Insurers •  Government departments

Cost of insurance fraud

NO ACCURATE MEASURE OF INSURANCE FRAUD The following are some of the calculations/estimates: •  Internationally insurance fraud = 7-15% of gross written

premiums •  2011 UK insurance fraud = 1billion pound, ABI (2012) •  UK – fraudulent claim exposed every hour LOCALLY: •  SAIA says 10% of claims amount contains an element of

fraud = R2-3billion

Insurance process flow chart: Structured & Unstructured Data (250 million lines of data)

4. CLAIMS PROCESS

SOS

INTER- MEDIARY

INFLATED

FALSE CLAIMS

BACKDATING OF COVER

CHANGING CIRCUMSTANCES OF CLAIMS

SUBMIT FALSE CLAIMS ON CLIENTS POLICY

2. ISSUE POLICY

3. PAY

PREMIUM

DEBIT

ORDER (D/O)

INTER- MEDIARY

THEFT OF PREMIUMS

CONTRAVENTION OF S45 of STI

1. SELL COVER

CONTACT

CENTRE SANTAM

MANDA-TED

INTER- MEDIARY

PREVIOUS CLAIMS

SECURITY REQUIREMENTS

UNDERWRITING FRAUD

FRAUD

MATERIAL AFFECTS FACTS

PREMIUM

UNDERWRITING FRAUD

5. ASSESOR

INTERNAL EXTERNAL

6. SERVICE PROVIDER

CORRUPTION

FALSE INVOICES

INFLATED REPAIR COSTS (FALSE CLAIMS)

INFERIOR REPAIRS

SUPPLIER FRONTING

Imagine doing an investigation here

Who would you

employ?

Sherlock Holmes Data mentalist VS.

Life is all about how we see things

Physical evidence Evidence in data VS.

Santam’s approach

Insurance process flow chart

4. CLAIMS PROCESS

SOS

INTER- MEDIARY

INFLATED

FALSE CLAIMS

BACKDATING OF COVER

CHANGING CIRCUMSTANCES OF CLAIMS

SUBMIT FALSE CLAIMS ON CLIENTS POLICY

2. ISSUE POLICY

3. PAY

PREMIUM

DEBIT

ORDER (D/O)

INTER- MEDIARY

THEFT OF PREMIUMS

CONTRAVENTION OF S45 of STI

1. SELL COVER

CONTACT

CENTRE SANTAM

MANDA-TED

INTER- MEDIARY

PREVIOUS CLAIMS

SECURITY REQUIREMENTS

UNDERWRITING FRAUD

FRAUD

MATERIAL AFFECTS FACTS

PREMIUM

UNDERWRITING FRAUD

5. ASSESOR

INTERNAL EXTERNAL

6. SERVICE PROVIDER

CORRUPTION

FALSE INVOICES

INFLATED REPAIR COSTS (FALSE CLAIMS)

INFERIOR REPAIRS

SUPPLIER FRONTING

Our case study – Investigating in numbers ELECTRONIC FUNDS TRANSFER FRAUD •  R22 000 only one incident •  Sufficient evidence to prove this •  Great case solved! •  Or is it? •  Enter Santam Sherlock Holmes and Data Mentalist •  Extract claims data processed by alleged fraudster = 20 000 lines (Overwhelming) •  Traditional analysis = Investigation = zero results (Frustration) •  Profile existing fraudulent transaction and alleged fraudster •  Refine analysis = Investigation = What’s in a surname? = R1.4m

DOES LIGHTNING STRIKE IN THE SAME PLACE TWICE? •  Extract claims data for entire department = 60 000 lines •  Analysis = Investigation = R1.2m fraud

Learning's

•  Huge opportunity for using data in investigations -  Uncover more fraud -  Provides most accurate financial impact of fraud incident -  Develop detective and proactive anti fraud strategies

•  Results from any form of data analysis does not prove FRAUD •  Still need hard-core investigations •  Having an inventory of data sets

•  Need the skill of both an investigator and the data mentalist – collaborative effort •  Using one person to execute both functions is NOT a collaborative effort •  Data heavy is the way of the future – need to embrace its usefulness

FRAUDSTERS DO – THEY UNDERSTAND THE USEFULNESS OF BIG DATA AS A MEANS OF CONCEALMENT FOR THEIR ACTIVITIES!

Insurance process flow chart

4. CLAIMS PROCESS

SOS

INTER- MEDIARY

INFLATED

FALSE CLAIMS

BACKDATING OF COVER

CHANGING CIRCUMSTANCES OF CLAIMS

SUBMIT FALSE CLAIMS ON CLIENTS POLICY

2. ISSUE POLICY

3. PAY

PREMIUM

DEBIT

ORDER (D/O)

INTER- MEDIARY

THEFT OF PREMIUMS

CONTRAVENTION OF S45 of STI

1. SELL COVER

CONTACT

CENTRE SANTAM

MANDA-TED

INTER- MEDIARY

PREVIOUS CLAIMS

SECURITY REQUIREMENTS

UNDERWRITING FRAUD

FRAUD

MATERIAL AFFECTS FACTS

PREMIUM

UNDERWRITING FRAUD

5. ASSESOR

INTERNAL EXTERNAL

6. SERVICE PROVIDER

CORRUPTION

FALSE INVOICES

INFLATED REPAIR COSTS (FALSE CLAIMS)

INFERIOR REPAIRS

SUPPLIER FRONTING

Hiding within those mounds of data is knowledge that could change the life of a patient, or change the world.” Atul Butte, Stanford School of Medicine

“Without big data, you are blind and deaf in the middle of a freeway” Geoffrey Moore, management consultant and theorist

“Information is the oil of the 21st century, and analytics is the combustion engine.” Peter Sondergaard, Gartner Research