Almost 30% of Americans Are Victims of Insurance Identity Fraud


“Unfortunately, data breaches have become more common in recent years as fraudsters seek access to a consumer’s personally identifiable information. Yet there is another dimensional fraud, which is sometimes overlooked, and that is that the fraudster is often someone known to the victim, ”Michael Trilli, research director of the Aite group, said in a statement. (Photo: Shutterstock)

Insurance fraud has affected nearly 30% of Americans, with younger generations disproportionately more affected by fraud, according to a new report.

The study by the Aite Group comes at a time when cybersecurity is a pressing issue for businesses and follows a period when numerous security breaches have been reported by large companies, including property and casualty insurance companies.

“Unfortunately, data breaches have become more common in recent years as fraudsters seek access to a consumer’s personally identifiable information. Yet there is another dimensional fraud, which is sometimes overlooked, and that is that the fraudster is often someone known to the victim, ”said Michael Trilli, research director of Aite Group. “Regardless of the identity of the fraudster, today’s environment places a responsibility on insurers to ensure that their clients can transact digitally and with peace of mind. “

Types of offenses

The report looked at two main types of identity theft crimes: app fraud, where an unauthorized person uses a consumer’s identity to purchase an insurance policy, and takeover account (ATO), when an unauthorized person uses an existing insurance account in a manner.

The data was collected as part of a survey of more than 8,000 US consumers aged 18 or older. It found that 27% of U.S. consumers have experienced insurance-related identity theft in the past two years. Of those who experienced insurance identity theft, 22% did so in relation to their health or dental insurance plan, 19% with their life insurance or annuity policy, and 18% with a personal insurance policy. The largest age group of consumers with insurance identity theft was between 31 and 39 years old.

One of the main findings is that anonymous international hackers were not the main problem. The data showed that the affected consumer’s family members were the bad actors most likely to submit a fraudulent claim, and many ATO victims knew the person who stole their existing accounts, either as a member of the family or as a known partner.

More thousand-year-old victims

The finding that baby boomers – older consumers – were less likely to fall victim to this type of fraud has also confused conventional wisdom to some extent. Instead, Millennials between the ages of 31 and 39 were the age group most likely to suffer from insurance identity theft.

And knowledge of consumer scams isn’t necessarily a shield against being a victim: The study found that 38% of those who were victims of identity theft said they were very knowledgeable about scams, while 32% of those who were not well informed. Overall, being told about these scams doesn’t seem to offer much protection.

The report included recommendations for insurers looking to tackle this type of fraud. These include:

  • Develop an end-to-end strategy. In addition to detecting fraud early on, part of the solution is also to apply fraud mitigation tools before a claim is paid (not after it is paid) as a safety net for cases where fraudsters escape the authentication process.
  • Think differently about authentication methods because current methods may not be enough given the amount of personal information in the hands of fraudsters due to data breaches.
  • Replace obsolete methods with biometrics. “Whether physical or behavioral, these methods will be more reliable than passwords or knowledge-based authentication and contribute to a better user experience,” the report said.
  • Develop a robust and transparent recovery process because a company’s brand is also affected.
  • Focus on consumer education. “Bring education on information protection and various scams, what to do with victimization, and perhaps the most difficult but most useful, teaching customers that the face of scammers could be family.” and friends, ”the report says.

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