What is a potential outcome of effective insurance fraud detection?

Effective insurance fraud detection leads to improved financial performance for insurers because it helps to reduce losses associated with fraudulent claims. When an insurer successfully identifies and mitigates fraudulent activities, it can lower the overall cost of claims, thereby increasing profitability. This enhanced financial performance can also enable insurers to offer more competitive premiums, invest in better customer service, and expand their product offerings.

Additionally, by detecting fraud effectively, insurers can maintain their solvency and strengthen their reputation in the market, which can further contribute to long-term financial health. This outcome supports the overall sustainability of the insurance industry and reinforces trust among policyholders, as lower levels of fraud may lead to more stable pricing and coverage availability.