Can insurance companies prevent ingenious identity fraud scams from exploiting technology interfaces between agents, brokers, customers and more?
Insurance companies have long been waging a hard fought battle against fraudulent claims from car accidents, fraudulent arson, disability scams or ghost brokers. Fraudulent claims are not only harmful to the bottom line, but also cause a severe erosion in customer trust causing insurance companies to lose brand recognition and revenue.
A recent CIFAS (UK Fraud Prevention Service) shows the startling impact of identity theft: 65% of all frauds now relate to the misuse of identity details. The report said clearly “the age of data enabled fraud is here to stay.” This comes as a harsh message for the public and private sector, where increased fraud awareness and traditional detection techniques have failed to stop the surge in identity crime.
Insurance companies are starting to be hit from all sides with ingenious identity fraud scams. Recently, the identity of a doctor was stolen, resulting in fraudulent claims submitted to multiple companies worth over £1 million. Other cases have been reported where the stolen account credentials of brokers, agents and partners have been used to commit fraud, leveraging authenticated communication mechanisms.
Many people are using false driver’s licenses or other documents to purchase insurance policies. The Insurance Fraud Bureau (IFB) reports that it was recently involved in one of the UK’s biggest investigations into identity fraud, helping Metropolitan Police investigate people who are using false identities to purchase insurance and make fraudulent claims.
Insurance companies have shored up their security technologies to prevent hacking and infiltration amongst the many data exchange touch points. But this defense has come at a cost. Preventing miscreants from exploiting the various technology interfaces between agents, brokers, customers, claims processors and the insurance companies’ own business systems severely slows down the agility necessary to operate in a fast paced business environment.
Using device identification and online malware protection solutions allows insurance companies to roll out new business processes quickly and securely. Similarly in a fluid agent/broker environment these solutions allow insurance companies to bring new independent agents online quickly and securely.
To protect against identity theft and online fraud, I strongly advise insurance companies be proactive – to implement technology to detect a scam before it occurs. Step one is to ensure that partners connecting to online claims processing systems are who they claim to be. Next, compromised accounts must be detected. Finally, alerts must be sent before suspect transactions are executed. It is also important to identify good customers who are unknowingly using devices infected with malware, alert them of this threat, and then be able to execute a secure transaction anyway.