Intake red-flag rules
Deterministic checks applied at first notification of loss that flag a claim for review before payment.
Part of the recommended approachTechnique: Rules Engine
Intake red-flag rules are the first layer of claims fraud detection, applied the moment a claim is reported.
They check things an investigator would check by hand: does the loss date fall suspiciously close to a policy’s start or a coverage increase, does the claimant have prior claims history that a new adjuster would not otherwise see, does the repair estimate come from a shop already flagged for prior inflated invoices.
This is the right starting point for almost every insurer because it requires no model and no label history, only the claim and policy fields already captured at intake.
It stays in place even after a risk-scoring model is added, since it gives adjusters an explainable, auditable floor that a model score alone does not provide.
It is the wrong tool once the organised or subtle cases matter more than the obvious ones, because a rule only ever catches what someone already described, and organised fraud can adapt to thresholds once they become known.
Strengths for this problem
- Catches known abuse patterns immediately, such as a claim filed within days of a policy's inception date or a coverage increase.
- Every flag is explainable to the claimant, the investigator, and a regulator, since it names the exact rule that fired.
- Cheap to stand up against fields already captured at first notification of loss, such as loss date, report date, and loss location.
Limitations for this problem
- Only catches abuse patterns an analyst has already seen and written down, such as staged collision descriptions or duplicate VIN submissions.
- Static thresholds, like claim amount over a fixed dollar figure, get learned and routed around by repeat claimants and complicit repair shops.
- Rule sets accumulate across product lines and start firing on the same claim for overlapping reasons, inflating referral volume without adding signal.
Data needed
- First notification of loss fields: loss date, report date, loss description, loss location.
- Policy inception date and endorsement history, to check claim timing against coverage changes.
- Claimant and repair shop identifiers already on file, to check against a watchlist.
How it is measured
- Firing rate and precision per individual rule, not just the rule set overall.
- Share of confirmed fraud referrals attributable to each rule.
- Time-to-flag at intake versus time-to-discovery for claims the rules miss.
Pitfalls
- Letting rules go untuned for years, so most of the referral volume comes from a handful of rules with low precision that nobody has retired.
- Writing a rule around a single well-publicised fraud ring, which stops paying off within a claim cycle or two once the pattern is known.
- Treating every fired rule as equally serious, which buries the claims most likely to be exaggerated among noise from routine flags.
Human oversight
An adjuster reviews every flagged claim before payment and decides whether to route it to a full investigation, request more documentation, or clear it. No rule pays or declines a claim on its own.