The Hartford's Technology Foils Fraud Artists

Technology played a central role in uncovering a fraud conspiracy that led to a lawsuit that was filed on Monday by The Hartford against 27 residents alleged to have staged motor vehicle accidents in order to make fraudulent injury claims.

According to The Hartford (Hartford, $167 billion in assets), the suit—filed in Morris County, NJ—accuses the defendants of intentionally rear-ending cars stopped in traffic or hitting vehicles exiting parking lots or side streets with the intent of filing bodily injury and personal injury protection claims, as well as feigning soft-tissue injuries. The accidents related to the case occurred from fall 1999 through summer 2000 in Passaic County, NJ.

The Hartford began applying technology to fraud investigation in earnest about five years ago, when the company's fraud investigation operations approached the IT group for help, according to Carl Balko, automation consultant, The Hartford. "In those days, we in no way had the tools, techniques and processes to go into our data and get at the kind of information that we need in these cases, which is basically entity information, such as name, address, telephone and tax ID number," Balko says. "We were faced by a huge amount of data that was located in many different locations and we had a variety of data integrity issues with it."

Seeking a more successful solution, The Hartford's IT staff then developed the technology that yielded the evidence for the present suit. "We built bridges and interfaces to all of the various sources of The Hartford's data," from internal sources as well as external partners such as healthcare providers and auto glass vendors, "and we've created our own data-mining software applications to systematically search the appropriate 'fields' from these sources," Balko says. "We then have some products that do the reporting, data visualization and mapping."

The principal technology consists of a series of "string-search" applications, which allow the construction of a search argument based on a string of characters, Balko says. "We use these applications to systematically search fields for the entities that were defined to us," by the investigative people, he adds.

To support the applications, Balko explains, "we acquired a fairly high-powered server three years ago-because of the intensity of the searching we do-and we're looking now toward upgrading to an even more powerful one."

The home-grown fraud investigation solution also incorporates the Analyst's Notebooks graphic display product manufactured by Springfield, VA-based i2 Corporation and mapping software by MapQuest (Denver). "We've looked at some of the major fraud detection products and found that what we've developed is, from a cost/benefit analysis perspective, the best application that we could use," Balko says. Comparing it to vendor products that incorporate elements such as the i2 tool, he adds, "using the native product we can take it to a much more detailed and expansive level."

The solution is a crucial tool for the carrier's fraud investigators, according to Joe Koenig, manager of The Hartford's major case team. "While with an awful lot of leg-work and paperwork analysis we could have put this case together without automation, but Carl's team probably saved us several years," he says. "In this case in particular, there probably would have been no benefit to filing the lawsuit because the payments would have been made by the time we were able to put all the evidence together."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio