ATLANTA, Sept. 22, 2021 /PRNewswire/ -- A new insurance
industry research study reveals that insurance carriers saw an
increase in consumer digital activity across both underwriting
(77%) and claims (76%) during the coronavirus pandemic and
indicated this recent increase in digital activity has in turn
spurred more identity fraud activity, according to 67% of survey
respondents. Authored by Aite-Novarica Group and presented by
LexisNexis® Risk Solutions, a leading provider of data, advanced
analytics and technology for the insurance industry, the Insurance
Fraud: Rethinking Approaches in the Digital Age report
provides advice for carriers on how to identify vulnerabilities and
ways to mitigate these vulnerabilities, while providing the
ultimate customer experience to genuine consumers.
The survey focused on identity fraud prevention subject matter
experts and decision makers at U.S. insurance carriers across life,
personal (auto and home), and small commercial lines. 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.
The study reveals that as insurers seek to achieve business goals
tied to digital transformation and place increasing importance on
customer experience, they should evaluate their fraud strategies
and capabilities across underwriting, customer service and claims,
which needs to include implementing a multi-layered and
comprehensive fraud mitigation strategy.
"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 Kim Brown,
director, insurance identity access management solutions, for
LexisNexis Risk Solutions. "Even as consumers opt for digital
interactions, they still expect their policies, accounts and
transactions to be protected against fraud. Similarly, some
carriers expect digital activities to continue to grow over the
next 12 months, and therefore need to invest in advanced identity
verification and fraud mitigation solutions to ensure their
business and their customers are protected. These identity
verification and fraud mitigation solutions provide the dual
benefit of helping carriers identify and flag discrepancies in the
submitted data proactively, while providing carriers the ability to
identify and fast-track genuine consumers with confidence"."
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 Michael Trilli,
practice leader, insurance, for Aite-Novarica Group. "For carriers
evaluating their current fraud strategies, I recommend looking for
ways to merge data from multiple sources, combining fraud solutions
to validate identity verification, and adopting processes to
authenticate and escalate all potential security risks."
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.
About LexisNexis Risk Solutions
LexisNexis Risk
Solutions harnesses the power of data and advanced analytics to
provide insights that help businesses and governmental entities
reduce risk and improve decisions to benefit people around the
globe. We provide data and technology solutions for a wide range of
industries including insurance, financial services, healthcare and
government. Headquartered in metro Atlanta, Georgia, we have offices throughout
the world and are part of RELX (LSE: REL/NYSE: RELX), a global
provider of information and analytics for professional and business
customers. For more information, please
visit www.risk.lexisnexis.com and www.relx.com.
About Aite-Novarica Group
Aite-Novarica Group is an
advisory firm providing mission-critical insights on technology,
regulations, strategy, and operations to hundreds of banks,
insurers, payments providers, and investment firms—as well as the
technology and service providers that support them. Comprising
former senior technology, strategy, and operations executives as
well as experienced researchers and consultants, our experts
provide actionable advice to our client base, leveraging deep
insights developed via our extensive network of clients and other
industry contacts. Visit us on the web and connect with us
on Twitter and LinkedIn.
Media Contacts:
Rocio Rivera
LexisNexis Risk Solutions
Phone: +1.678.694.2338
rocio.rivera@lexisnexisrisk.com
Mollie Holman
Brodeur Partners for LexisNexis Risk Solutions
Phone: +1.646.746.5611
mholman@brodeur.com
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