May 30, 2005
UNSW News
By Susi Hamilton

World-first fraud detection technology that could save the Australian health industry as much as $2 billion dollars a year, has been recognised with a CRC innovation award.

The Capital Markets Cooperative Research Centre (CMCRC), which is led by Professor Mike Aitken of the School of Banking and Finance at The University of New South Wales (UNSW), developed the technology that detects the fraud.

Industry experts suggest as much as ten percent of the nearly $20 billion paid per annum could be fraudulent. Early trials of the technology have already identified four percent of claims as suspect. Projected to the marketplace even four percent amounts to potential savings of $800 million per annum.

The resulting software “Dtechtive” is now being used commercially in Australia with good potential in overseas markets, supporting the modus operandi of the CMCRC “Learning from Australia to Sell to the World.”

“The people we are primarily targeting in the first tests of the system are providers of ancillary services such as opticians and dentists,” said UNSW Professor Mike Aitken, who is the Chief Executive Officer of the CMCRC.

“One of the big advantages of this technology is that it can detect fraud in real-time, so we are able to catch people who are rorting the system on the spot,” said Professor Aitken.

“This technology will monitor their claims as they are submitted and health insurers have the option not to pay the ones that the systems identifies as inappropriate,” said Professor Aitken.

The CMCRC adapted cutting edge research in data management, mining and visualisation from the capital markets arena, to make it applicable to the health insurance industry. The resulting algorithms developed directly from research are currently detecting 58 percent of all instances of suspicious claims.

“It feels great to take academic ideas and turn them into commercial reality,” said Professor Aitken. “Imagine what the health sector could do with and extra $2 billion in savings. It's worth the effort!”

The CMCRC partners are the Australian Centre for Advanced Computing and Communications, ABN AMRO, Credit Suisse First Boston (CSFB), Reuters Australia Pty Ltd, Securities Industry Research Centre of Asia-Pacific (SIRCA), SMARTS Pty Ltd, the University of New South Wales, the University of Sydney, the University of Technology, Sydney and Macquarie University.

The CMCRC was one of four Cooperative Research Centres to receive the CRC Association’s innovation awards, which were presented by the Federal Education Minister, Dr Brendan Nelson on 19 May 2005.