New Online Fraud Complexities May Arise for Insurance Companies
September 24 2019 - 8:00AM
As more U.S. consumers use digital platforms when engaging with
insurance companies, new fraud challenges are likely to arise for
insurance carriers. TransUnion (NYSE:TRU) and iovation, a
TransUnion company, shared this news as well as recent industry
fraud data today at InsureTech Connect 2019. Among the 10 billion
global online transactions iovation screened from Sept. 2018 to
Sept. 2019, it identified 9.14% as risky in the insurance industry
compared to 5.09% across all industries.1
“The advantages of an online insurance offering is undeniable.
It makes business processes more efficient and the consumer
experience more convenient,” said Melissa Gaddis, iovation’s senior
director of customer success. “However as transactions move online
so will the fraudsters. With U.S. consumers becoming increasingly
comfortable transacting with insurance companies online, we expect
new types of digital fraud to emerge here like they have in other
parts of the world.”
According to research from global market intelligence agency
Mintel, in 2017 only 9% of U.S. consumers said that they used their
health insurance provider’s mobile app. A year later, that number
nearly tripled to 25% 2. Mintel also found that in 2019, 25% of
millennials were interested in an online insurance application
process while 29% of Gen Z consumers said they were interested in
using mobile tools for their insurance3.
As mobile becomes more prevalent, TransUnion and iovation
believe that insurers face several fraud challenges, including:
- Application – Fraudsters create accounts using
someone else's personal information, fake details or a mix of the
two. They traditionally open insurance policies for fictitious
beneficiaries, or alter and falsify application information to
reduce their premiums. Attempted online first-party application
fraud -- when a person falsely applies for an insurance policy --
is up 516% among iovation customers from 2015 to 2018.
- Bad Debt – Insurers provide coverage for a
period of time for which they do not receive payment. This is
caused by a lack of payment with a bad check, stolen credit card,
etc. Bad debt is a particularly major issue for auto insurance
carriers and typically makes up 1-2% of all personal automobile
insurance premiums written.
- Ghost Broking – Fraudsters purchase insurance
with false details or create false documents that look like they
are from a legitimate insurance carrier. They then resell the
policy to an unsuspecting victim, who is then not covered if an
event occurs. Online third-party application fraud -- when a person
falsely claims to be a broker applying for another person’s
insurance policy -- is up 139% among iovation customers from 2015
to 2018.
- Account Takeover – This fraud occurs when
someone not insured on a policy accesses it to either obtain
sensitive information or dishonestly route an upcoming claims
payment to themselves. This practice is more prevalent with life
insurance policies. Preventing this fraud is critical to do without
harming the customer experience.
- Claim – A claimant makes up or exaggerates a
claim. Attempted online first-party claims fraud -- when a person
applies for a fictitious or exaggerated insurance claim -- is up
271% among iovation customers from 2015 to 2018. Attempted online
third-party claims fraud -- when a person falsely claims to be a
broker applying for a fictitious or exaggerated insurance claim --
is up 63% among iovation customers from 2015 to 2018.
- Contact Center – As online fraud prevention
improves, fraudsters switch to the call center. They gather data
about policyholders by mining social media or the dark web.
Fraudsters then combine high-pressure tactics with spoofing
technology to socially engineer agents and take over policyholders’
accounts or apply for new policies.
“Fraud is now top of mind for many insurance carriers,
especially as digital engagement becomes more widespread in the
industry,” said Mark McElroy, executive vice president and head of
TransUnion’s insurance business unit. “As more prospective
policyholders move towards using digital platforms, it’s incumbent
on carriers to leverage all available tools to ensure they avoid
fraud and keep costs down for both themselves and consumers.”
The TransUnion and iovation insurance solution offerings combine
iovation’s digital identity solutions that use device intelligence
and TransUnion’s identity verification solutions. More information
about these insurance solutions can be found at the following
links: iovation insurance and TransUnion insurance. For an
infographic about new fraud challenges likely to arise for
insurance carriers, go here. To discuss in-person, visit iovation
booth 603 at the InsureTech Connect Conference in Las Vegas, Nev.
through Sept. 25.
About TransUnion (NYSE: TRU)
Information is a powerful thing. At TransUnion, we realize that.
We are dedicated to finding innovative ways information can be used
to help individuals make better and smarter decisions. We help
uncover unique stories, trends and insights behind each data point,
using historical information as well as alternative data sources.
This allows a variety of markets and businesses to better manage
risk and consumers to better manage their credit, personal
information and identity. Today, TransUnion has a global presence
in more than 30 countries and a leading presence in several
international markets across North America, Africa, Europe, Latin
America and Asia. Through the power of information, TransUnion is
working to build stronger economies and families and safer
communities worldwide.
We call this Information for Good.®
http://www.transunion.com/business
About iovationiovation, a TransUnion company,
was founded with a simple guiding mission: to make the Internet a
safer place for people to conduct business. Since 2004, the company
has been delivering against that goal, helping brands protect and
engage their customers, and keeping them secure in the complex
digital world. Armed with the world’s largest and most precise
database of reputation insights and cryptographically secure
multifactor authentication methods, iovation safeguards tens of
millions of digital transactions each day.
Contact |
Dave Blumberg |
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TransUnion |
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E-mail |
david.blumberg@transunion.com |
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Telephone |
312-972-6646 |
1 iovation defines risky transactions as those that its
customers either deny or review further due to fraudulent
indicators
2 Mintel Reports - Health Insurance - US - October 2018
3 Mintel Reports - The Insurance Purchase Decision - US - June
2019
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