The manipulation of data within an insurance application, specifically falsifying an ID to sell policies on, or to set up false insurance policies to make fraudulent claims, has become a major challenge for the insurance market.
Incidences of application fraud were up 200% in 2019, according to an ABI survey. The fact that detection rates are up shows insurance providers are getting better at spotting the flags for fraud, but it also demonstrates how big an issue application fraud had become even prior to the pandemic and the rise in ID fraud this could bring.
Earlier this year, The Insurance Fraud Bureau (IFB) was warning of insurance scams that exploit the financial loss people are facing as a result of the disruption of COVID-19. IFB Investigators noticed fraudsters using recruitment as a tool to phish for personal information and insurance details from job applicants.
Most notably, this has been seen with bogus delivery driver roles. Job seekers will be told that their application has been successful and then asked to hand over their details, leaving them with their identities stolen and their insurance policy being used to help facilitate ‘Crash for Cash’ scams – often used to fabricate road traffic collisions.
According to the IFB, ‘Ghost Broker’ scams are also rising. The IFB has seen its percentage of investigations into the issue double in recent years.
For insurance providers, the checks they make at application, quote and policy inception to spot where personal data has been falsified or manipulated are essential but can take up precious time and resources. Also, while these checks are effective they are not 100% fail-safe and can still leave the market and its customers exposed to fraud.
Given the vast majority of individuals buying insurance are genuine and just want a quick, painless application and quote experience, insurance providers need to find a way to automatically spot possible ID fraud without impacting the streamlined service they provide or asking customers to ‘jump through hoops’ before they will put them on cover.
So it has come down to looking at the standard information provided in the application process to understand which piece of data could help validate the person’s identity to a greater degree of accuracy, when used alongside the existing fraud checking techniques used by the market.
We can share a name, a date of birth, an address, but a key piece of personal information provided in an insurance application that is unique to each of us is an email address.
An email address is a unique global identifier used in virtually 100% of online transactions. Our email address has become central to the way we function – even more so during the past year as so much of the way we live has moved online. Changing an email address is also difficult because it’s linked to all of our online accounts.
It’s not just the email address itself, it’s the digital footprint that goes with it based on how it has been used online. Email addresses can unlock digital engagement across many industries to help validate an individual’s ID.
By using billions of transactions from global payment processors and other online industries it is now possible to provide an instant risk score to insurance providers, to indicate whether the ID is genuine or could be fraudulent, based on an individual’s email address information, and other personal information provided, at the point of quote.
The risk is assessed by evaluating email address metadata points such as whether the email and domain even exist, or whether the email bears close resemblance to the proposer’s name for the policy.
In addition to automatically validating every quote that comes through to an insurance provider, the email address risk score can help inform pricing decisions as part of a wide range of data enrichment datasets, including publicly available data and policy history information, property, vehicle and environmental data.
Email address intelligence holds much potential in preventing insurance providers writing business that is potentially fraudulent, protecting individuals from having their identity compromised while supporting a swift and smooth on-boarding process.
Some 91% of individuals have the same email address for more than 3 years, according to DMA Insight’s consumer email tracking study. Considering around 51% have the same email address for more than 10 years and the number of global e-mail users is set to grow to 4.48 billion users in 2024, email address intelligence-based risk scores could become one of the insurance sector’s most powerful tools for detecting application fraud.
By James Burton, senior director of insurance product management for U.K. and Ireland, LexisNexis Risk Solutions