The Insurance Fraud: Rethinking Approaches in the Digital Age report surveyed 132 U.S. identity fraud experts at life, personal and small business insurance carriers. Participants were asked to identify reoccurring points of entry for fraudulent individuals/activities and to share their thoughts about how carriers can better protect their underwriting, customer service and claims transactions without inhibiting the digital experience.
Digital transformation comes at a cost
The report found that instances of identity fraud increased similarly across underwriting and claims, with over 70% of respondents reporting upticks in both sectors. According to the study, the drivers of fraud activities most carriers experienced could be traced back to three main areas:
- The assets tied to their digital transformation efforts, such as online portals, alternate underwriting, and claims automation
- The availability of consumer data to fraudsters due to data breaches
- The pandemic’s impact on changing consumer behaviors/lifestyles
Fraud risk has increased over the past year due to the pandemic-motivated decrease in face-to-face insurance capabilities, the report notes. The increased threat of fraud necessitates action on behalf of insurance carriers in order to mitigate fraud risk.
A multi-layered strategy could reduce fraud
The study asked respondents about the fraud reduction solutions currently in place at their firms.
- 73% of respondents use multi-factor authentication in their digital underwriting and claims software
- 70% of respondents reported the use of one-time passwords
- Two-thirds of respondents use password-free authentication in their business
- Just over half of respondents reported using link analysis and fraud risk scores to defend against fraud
The report suggested that combining security strategies could combat the increasing fraud due to the effects of digital transformation. With over 80% of respondents estimating that their digital services will either increase or remain the same in the coming 12 months, the uptick in identity fraud is likely here to stay without security intervention.
