AI Helps Cut Workers Comp Costs by Identifying Fraud and Difficult Claims

Artificial intelligence (AI) is revolutionizing the way insurers and employers manage workers’ compensation claims, helping to cut costs by identifying difficult and fraudulent claims. By analyzing injury records, claims handler notes, background reports, prognosis details, and communication transcripts, AI can predict claim trajectories and intervene accordingly. This technology has already saved millions in workers comp costs.

AI’s potential in uncovering workers comp fraud is significant, addressing both claimants who fake or exaggerate injuries and medical providers who prescribe unnecessary treatments. The Coalition Against Insurance Fraud reports that up to 16% of comp claims have some elements of fraud, leading to $9 billion in losses for insurers and employers. Companies like Clara Analytics and Gain Life Inc. have launched products leveraging AI to detect fraud patterns, although the technology only flags potential fraud for further investigation by human claims handlers.

Despite its promise, AI is not without challenges. False positives and the burden of proof can slow its adoption. Insurers must tread carefully, ensuring that AI findings are backed by substantial evidence before pursuing fraud claims. Nonetheless, AI remains a powerful tool in enhancing the efficiency and effectiveness of fraud prevention strategies.