April 20, 2018
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Posted February 9, 2017
By now, most insurance industry brands understand that when it comes to today’s want-it-now world of business, they had better have an app for that.
But in 2017, many brands will discover that while next-generation web and mobile apps can bring incredible ease, utility and convenience to customers, employees and partners, they may also hand fraudsters new ways to create absolute chaos.
And the damage to brand reputation could be catastrophic.
We’re All InsurTech Brands Now
This year, 80% of insurers say increased competition, an uncertain regulatory environment, pricing pressures, and disruptive new technologies will accelerate the race for technological innovation throughout the industry.
This involves modernization initiatives aimed at enhancing and streamlining the entire insurance ecosystem—from insurance quotes, to policy approvals to claims processing to payouts.
But today, efforts to create brand differentiation can also mean tying backend systems to everything from in-car telematics-based services, wearables to assess and promote physical activity, AI-powered “robo-agents” to offer insurance quotes and perhaps even sign up customers via new channels such as Amazon’s Alexa voice service, to niche-oriented health insurance portals.
There’s also another dynamic in play: A host of hot app-based startups with cool names attracting an estimated $4.7 billion in funding.
Think Metromile (auto-insurance-by-the-mile), Trovo (on-demand insurance for individual assets such as computers, bikes, and cameras), and Lemonade (a designed to turn the process of getting homeowners insurance into “a delightful experience”).
The net result for brands large and small: Where once the phone or an in-person meeting with an employee or a broker constituted “the brand experience,” web and mobile apps are increasingly the primary user interface. The app is the brand.
Which is all good. Except when you consider that the highly sensitive personal information needed to set up accounts and file claims make these apps irresistible attack vectors for fraudsters.
Yes, digitization has a downside: an explosion in fraud that is estimated to cost the insurance industry over $250 billion annually.
External data breaches are now a daily occurrence, with some insurers now attracting an average of 13 cyber attacks per day.
More than a year after a high-profile data breach at Anthem and Premera Blue Cross, health insurers remain especially attractive to crooks and cybercrime rings, with attacks up more than 125% since 2010, according to a 2015 study published by the Ponemon Institute.
Why? Health insurance information can be worth 50 times that of financial information, largely because perpetrators can bill fraudulent claims again and again, often going undetected for months on end.
In property & casualty insurance, it’s estimated that 10% of all claims are now fraudulent, perpetrated by crooks and everyday folks.
Factor in the growing threat that insiders, partners, and third party providers represent in every segment of the industry, and we’re talking over 150,000 fraudulent claims uncovered in the last year alone—with who knows how many left undetected.
This kind of fraud can give your brand a serious black eye—shaping perceptions and influencing key decisions for those choosing or switching policies. In a business that gets more competitive every day, the brand with a clean nose wins.
But the fact is, many insurers struggle to harness the promise of digitization while mitigating its downsides. And solutions won’t come easily.
360-Degrees of Fraud Prevention
In 2017, look for insurers to deploy a new generation of advanced analytics to defend the major entry points of fraud through app-based interfaces: Fraudulent account takeovers and new account creation using stolen credentials or identity information.
The problem: Rampant data breaches have rendered static identity information useless. As a result, insurers will seek solutions that provide dynamic information around each user’s digital identity across devices, locations and historic and real-time behavior.
Innovative insurance brands such as One Call have found success with such efforts depends on access to shared global threat intelligence spanning multiple industries. It also requires the analytics firepower to compare that intelligence with each user’s digital identity in real time to streamline the experience for “good customers” while stopping the bad guys cold.
With luck, many brands will also discover that what’s good for security might also pay serious dividends for the brand—helping to refine and even tailor the experience by delivering:
After all, brand choices and loyalties will increasingly depend on how consumers feel about insurers’ web and mobile apps—and how safe they keep their info.
Here’s to keeping Mayhem out of your apps in the year ahead—and beyond.