It’s no secret that staged car accidents, a sudden change in a spouse's life insurance policy, and doctors diluting medicines for profit continue to make headlines. This is because these types of insurance fraud are estimated to cost the insurance industry between $85 and $120 billion annually and each American household $200 to $300 per year.

So how can an insurer use technology to outsmart those criminals trying to beat the system?

One example is MIB, the industry's largest fraud detection service that is used by nearly every North American life and health insurance carrier. MIB is using a service oriented architecture using IBM technology to proactively identify potential fraud before it impacts the insurer and, of course, us the consumers.

Let me explain how this works. Nearly every time a consumer applies for life insurance, the insurer contacts MIB to cross reference the application. MIB’s SOA helps detect potential fraud based on facts such as the applicant's insurance and medical history; the proximity of marriage, establishment of a life insurance policy and a spouse's untimely death, and the frequency of auto accidents resulting in medical claims.

Since MIB is a member organization, they’re realized that SOA can also help build an online community among credit reporting agencies, healthcare and insurance providers, and government agencies by extracting the information that’s trapped in various software applications that are located inside and outside a company and bringing it together under one roof in a faster, more secure and economical way. This information helps create an accurate and comprehensive credit history profile while also adhering to industry regulations.

MIB is moving towards an SOA so its members can more easily link to MIB's services without requiring they purchase new technology. At the same time, SOA is allowing MIB to use its existing software to better serve its 500 member life and health insurance companies by helping to proactively identify potential fraud.

For MIB, an SOA empowers both insurers and consumers by helping set fair prices for insurance policies based on factual information that may have previously gone undetected.

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