By James Burton, senior director of insurance product management for U.K. and Ireland, LexisNexis Risk Solutions
Insurance fraud has become a multi-billion-pound problem[i] as the techniques fraudsters are using to defraud insurance providers and their customers become more audacious and more sophisticated. Consider the delivery drivers targeted by fraudsters with the offer of jobs in the pandemic who had their ID compromised for crash for cash insurance scams[ii].
The insurance market works hard to keep at least one step ahead by tackling fraud at the ‘front end’ using ID validation checks to help confirm the applicant is who they say they are. Now email address intelligence is set to strengthen these capabilities, helping the market spot potential cases of application fraud early in the customer on-boarding process.
The growth in ID fraud related crimes has been highlighted during the pandemic,[iii] but even before the outbreak of Covid-19, incidents were rising rapidly. Figures from the Association of British Insurers (ABI) show that in 2019, cases of insurance application fraud rose by more than 200% on the previous year, which equates to 760,000 cases of detected insurance application fraud, worth £1.4billion.[iv]
While application fraud is usually the deliberate misstating of data such as previous claims in the application to get a cheaper quote, it also includes the use of stolen or fake ID to buy insurance to sell on. These ‘ghost brokers’ often promote unrealistically cheap car insurance on social media and sell on fake policies using stolen ID to unwitting younger or high-risk drivers who are in search of a cheap policy. Aviva recently confirmed that cases of application fraud and ghost broking grew over a third in 2020[v].
The global pandemic has dramatically expedited the insurance industry’s adoption of digital business. According to a report from Deloitte[vi] the UK already leads the world in online motor insurance sales – 81% of all policies are currently sold via a computer or mobile phone. This certainly looks set to continue and only heightens the need for robust ID validation checks at the point of application, quote and post policy inception while at the same time providing a seamless online experience.
The problem is that the existing techniques used to validate a person’s ID can be time-consuming for both the insurance provider and the customer. And while the data used by the market such as public records data and shared industry data provide a strong foundation for confirming ID, they are not fool-proof when dealing with determined fraudsters. ID checks can also feel intrusive and unnecessary, creating friction with the majority of customers who are genuine. This means insurance providers have a tricky balance to achieve in protecting themselves and their customers from fraud using ID validation techniques pre and post policy inception but doing so without slowing down or complicating the application and quote process for the customer.
This is where email address intelligence based on the email address provided during the application process, is taking ID validation to the next level.
An email address is a unique global identifier and sits at the heart of a consumer’s digital persona. Our research[vii] shows that 91% of people have had the same email address for three years or more and 51% for more than 10 years. As well as being a persistent identifier that stays with a person overtime, it is also linked to multiple online accounts and transactions. As a result, each individual email address creates a digital footprint which provides a rich transaction history, full of online behavioural insights which could make it one of the most powerful tools for detecting application fraud.
By using billions of transactions from global payment processors and other online industries it is now possible to provide an instant risk score[viii] to indicate whether the ID is genuine or whether it could be fraudulent – based on an individual’s email address information and other personal information provided, at the point of quote. Risk is assessed by evaluating email address metadata points, such as whether the email and domain even exist, or whether the email bears a close resemblance to the proposer’s name for the policy.
As well as automatically validating every quote that comes through, the email address risk score can also bring a new layer of insight that helps inform pricing decisions.
Email address intelligence-based risk scores are set to boost the insurance market’s resilience to ID fraud, without compromising the experience of the genuine end customer. They may help to protect individuals from having their identity compromised while at the same time support a swift and efficient on-boarding process. For insurance providers, striking the right balance between robust ID checks and a streamlined application process should no longer be quite so tricky to achieve.
[vii] DMA Insight: Consumer Email Tracking Study (2015) – UK respondents
[viii] LexisNexis® Emailage® Rapid is a powerful fraud risk scoring solution based on the email address and other personal information provided during the application process. In February 2020, LexisNexis Risk Solutions acquired Emailage, a fraud prevention and risk management solutions provider. LexisNexis® Emailage® is a proven risk assessment tool that is fuelled by continuously updating global digital insights and uses a patented, proprietary analytic approach to reimagine fraud detection.