Gone are the days of family-owned insurance agencies on Main Street. Consumers are no longer willing to travel to a physical location in order to fill out paperwork and offer physical identification. In a one-click shopping world where retailers offer multi-channel convenience across devices and apps, home and auto insurance providers find themselves facing the same demands. Prospective clients want to treat shopping for insurance like shopping for books and toys – smooth and instant.

Believe it or not, this is actually good news for insurance providers. New technology allows insurance providers to quickly process new policy applications from a variety of channels such as websites and mobile phone apps. Offering a varied and outstanding customer experience across devices has attracted new customers and boosted the bottom line for insurance providers. However, like other industries in the digital marketplace, there is a dark side to this convenience.

Attracting fraudsters too 

Online insurance providers may offer a unique and convenient service, but that does not make them unique in the eyes of fraudsters. The very same technology that provides a frictionless policy application process for customers also gives fraudsters an opportunity to attack providers.

Fraudsters are betting on the fact that customer demands for a fast and frictionless experience means providers are skipping crucial identity verification steps. Bad actors may also be counting on the fact that online policy purchases and mobile apps are relatively new technologies for these businesses. Often when businesses implement new tech, they cut costs by delaying implementation of security and fraud prevention features. 

Of course, fraud is not a new problem facing insurance agencies. Traditional insurance fraud, where policyholders intentionally damage property or lie about how the damage occurred, has been a battle that insurance providers have been fighting for ages. However, online fraud in the era of digital insurance sales comes in new forms that insurance providers often aren’t prepared for. Below are the primary tactics cyber fraudsters have deployed against insurance companies at the application level:

  • By using a synthetic ID – With billions of pieces of identifying data being breached and released on the dark web, creating a real-looking fake identity is incredibly easy for fraudsters. Using that ID, criminals are able to purchase insurance policies and file fake claims before disappearing with the payout. 
  • By tweaking the details – Online insurance applications have given way to their own form of friendly fraud, a tactic used by legitimate customers to avoid paying full premiums. In the case of insurance application fraud, customers with verifiable identity information change some of their policy details to reduce the cost of the policy. For example, a young driver may change the primary driver on their auto policy to an older family member for age-related discounts. 
  • By taking over an existing account – Account takeover fraud is a common attack and occurs when fraudsters are able to gain access to an account through a compromised email address or policy credentials. Upon gaining access, they are able to change the details on the account. For example, fraudsters might update an existing account to their name and request new policy ID cards to use as proof of insurance when driving without actually paying for the policy. 

Stopping fraud before it starts

The tactics being employed by fraudsters are not new to the eCommerce ecosystem, and that is good news for online insurance providers who are starting to explore more modern technologies to enable their business. In order to stop insurance application fraud before it happens, insurance providers be proactive in researching and implementing a holistic fraud prevention strategy. 

The most effective way for providers to prevent fraud is by using a solution that is backed by a global network of shared fraud data, such as the network intelligence provided with the Emailage Email Risk Score. Fraudsters are unlikely to solely focus on one specific industry for all of their attack needs, so insurance providers benefit from shared intelligence on confirmed fraud coming from around the world and a variety of businesses. 

Another added benefit is more application approvals. It may sound contradictory, but one of the best tools in the fraud prevention arsenal is actually identifying good customers faster. Shared digital identity verification intelligence allows providers to approve more applications automatically and send fewer applications to manual review, reducing friction and abandoned applications. Fraud prevention not only stops losses but boosts top-line revenue too.

Want to learn more about how globally sourced data anchored by the power of a simple email address can help you approve more new policies? Contact us to get started today!