New Identity Management Study from LexisNexis Risk Solutions and Aite-Novarica Group Reveals Increase in Fraud as Industry Reports Uptick in Digital Transactions
The survey focused on identity fraud prevention subject matter experts and decision makers at
"Our experience tells us the largest drivers of identity fraud for insurance are a combination of purely digital transactions and the increased availability of consumer data whether on the dark web, social media or online consumer portals across all industries," said
Cost of Enhanced Customer Experience
While carriers' digital interactions are enhancing customer experience and creating deeper customer relationships over the life of a policy, 67% of insurers surveyed said that the increase in digital transactions has resulted in higher fraudulent activity. The most common points of entry for identity fraud among property and casualty (P&C) carriers are:
- Underwriting or at the point of application
- Customer service or at the point of account
- Claims at the point of payment
Adopting a Multi-Layered Fraud Strategy
There are many types of solutions that have emerged to help protect online identity and accounts, but the level of adoption among carriers varies. While multi-factor authentication is being widely implemented across lines, more advanced fraud mitigation solutions like digital fraud risk scores and link analysis remain underutilized. Aite-Novarica recommends using a combination of solutions that specifically address fraud risk in underwriting, customer service and claims to complement existing customer-facing solutions and fill any additional vulnerabilities. According to the report:
- 73% of carriers currently use multi-factor authentication citing its increased accuracy in identifying fraud as well as its benefits for easing compliance, deployment and efficiency.
- 70% use one-time passwords, particularly life and small commercial carriers who highlighted its efficiency.
- 67% use password-free authentication, which is the top solution for reducing underwriting and claims fraud.
- Only 58% of carriers use link analysis and 54% use digital fraud risk scores, underscoring the need for further exploration and investment by many carriers.
Aligning solutions that can provide identity verification and authentication can help carriers avoid unnecessary risks, provide genuine consumers with a faster, low friction experience. Being able to systemically isolate the higher risk, carriers can now make better decisions across their workflow and defend their brand and their customers from cybercriminals and potential fraud.
"In order to bolster their defense against fraud throughout the policy life cycle, carriers need to ensure that their solutions accurately identify and prevent fraud from the point of entry, which will require multiple capabilities and a multi-layer approach," said
The report outlines five recommendations to help carriers stay a step ahead of fraud before it impacts their bottom lines:
- Recognize that the evolving digital activity between carriers, agents and consumers has become the new normal, and that you need to grow with it.
- Don't overlook the current increase in fraud - address it before it results in higher claims costs, strained operations and tainted consumer relationships.
- Close the capability gap by implementing more advanced fraud prevention solutions.
- Adopt a multi-layered approach with multiple solutions for a stronger defense because no single technology will adequately detect and prevent fraud.
- Spread investment across functional areas to ensure your customers are protected throughout their policy life cycle.
To read the full report on Insurance Fraud: Rethinking Approaches in the Digital Age, click here.
Visit LexisNexis Insurance Fraud Solutions to learn more about the company's identity access management and fraud prevention offerings.
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