It is hard to know how ID fraud occurs in claims, carriers say
Around 80% of insurance carriers say they deal with identity-related fraud on a monthly basis.
Nearly three-quarters of personal line carriers report difficulties in tracking down the source of identity-related fraud in their claims processes, while 47% admit that ID fraud is very difficult to detect, according to a survey of executives, directors and senior managers pulled from the top 50 U.S. carriers by LexisNexis Risk Solutions.
Further, 80% of carriers surveyed said they deal with identity-related fraud “at least monthly” and 93% said it has a negative impact on their business, LexisNexis reported.
“Virtual or self-service claims have been on the rise since the pandemic, and while this can create a streamlined, digital and user-friendly consumer experience to help fast-track claims cycles, insurers have entered a world where they have to bridge physical, digital and behavioral dimensions to authenticate identities,” Tanner Sheehan, vice president and general manager, U.S. claims, LexisNexis Risk Solutions, said in a release. “Especially among younger age demographics, digital claims channels are becoming increasingly popular, but growth in self-service options among insurers absolutely must be met with investments in tools to mitigate digital identity fraud. Insurers with a multi-layered approach to mitigating digital identity fraud experience fraud costs that are 25% lower than those who do not, according to our research.”
Only 33% felt they had effective tools to detect and mitigate ID fraud. However, larger insurance companies are more confident, with 60% of the top 10 carriers feeling they have the right tools in place. Yet, 60% of the top 10 carriers also said they could be doing more.
While ID fraud is difficult to detect in personal line claims, a significant majority of carriers are going “beyond the basics,” in an effort to fight back, according to LexisNexis. These efforts include the use of multifactor authentication (MFA), risk scoring and continuous monitoring tools. Further, all respondents said they verify personally identifiable information and use one-time passwords, while 93% use MFA.
“Our research clearly demonstrates that digital identity fraud is on the minds of the vast majority of the top 50 carriers, but we begin to see a stark difference in the maturity of certain insurers when it comes to those who have developed a multi-layered approach versus those who have not,” Souvik Kumar, director, U.S. claims, LexisNexis Risk Solutions, said in a release. “With digital channels here to stay, the carriers who emphasize digital identity fraud mitigation by capturing disparate digital, physical and behavioral data points for a dynamic view of the customer are better positioned to weather potential profitability, brand reputation, and customer retention and acquisition concerns at the point of claim.”
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