Digitalisation of insurance leads to increase in ID fraud


A new insurance industry research study reveals that insurance carriers saw an increase in consumer digital activity across both underwriting (77%) and claims (76%) during the coronavirus pandemic and indicated this recent increase in digital activity has in turn spurred more identity fraud activity, according to 67% of survey respondents.

Participants of the study were asked to identify reoccurring points of entry for fraudulent individuals/activities and to share their thoughts about how carriers can better protect their underwriting, customer service and claims transactions without inhibiting the digital experience.

The report found that instances of identity fraud increased similarly across underwriting and claims, with over 70% of respondents reporting upticks in both sectors. According to the study, the drivers of fraud activities most carriers experienced could be traced back to three main areas:

1. The assets tied to their digital transformation efforts, such as online portals, alternate underwriting, and claims automation

2. The availability of consumer data to fraudsters due to data breaches and increased death rates

3. The pandemic’s impact on changing consumer behaviours and lifestyles

Fraud risk has increased over the past year due to the pandemic-motivated decrease in face-to-face insurance capabilities, the report notes. The report concludes that the increased threat of fraud necessitates action on behalf of insurance carriers in order to mitigate fraud risk.

The study asked respondents about the fraud reduction solutions currently in place at their firms. 

- 73% of respondents use multi-factor authentication in their digital underwriting and claims software 

- 70% of respondents reported the use of one-time password

- Two-thirds of respondents use password-free authentication in their business

- Just over half of respondents reported using link analysis and fraud risk scores to defend against fraud

The report suggested that combining security strategies could combat the increasing fraud due to the effects of digital transformation. With over 80% of respondents estimating that their digital services will either increase or remain the same in the coming 12 months, the uptick in identity fraud is likely here to stay without security intervention.

One way that insurance companies can look to decrease the incidences of deceased identity fraud, which is now one of the fastest forms of identity fraud, is through combining security strategies such as MFA with fraud prevention solutions such as Halo. Halo enables organisations to identify any claims or applications being made with information belonging to someone who is known to have passed away. This means that any suspicious activity is flagged and can be verified reducing the risk of fraudulent claims.


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