IISA – Bucket vs. Searchlight – a Scientific Approach to Investigating Exceptional & Suspicious Claims

As part of an overall strategy response for cost containment, insurance systems often apply some form of a procedural If/Then claim triage algorithm. These types of If/Then decision models are akin to what is known in systems theory as a Forward Chaining inference engine. These models can rely on the assumption of a stochastic environment. In probability theory, a purely stochastic system is one whose state is non-deterministic (or “random”) so that the subsequent state of the system can be determined probabilistically.