James Burton, senior director of insurance product management for U.K. and Ireland, LexisNexis Risk Solutions
As household finances come under pressure, memories of the 2008 recession where fraudulent insurance claims increased by 17% have come to the fore and fears are growing that fraudsters are already looking to take advantage of the fall-out .
The insurance market is highly conscious of the need to deliver fast and fair quotes, while doing their utmost to protect themselves and their customers from scammers. Tackling fraud at the front end, before the applicant is on-boarded, has therefore become a heightened priority for the market.
Application fraud is usually conducted with the intent of selling policies on or setting up false insurance policies, leading to fraudulent claims. In both scenarios innocent insurance customers can end up victims – whether it’s a young driver sold a cheap insurance policy from a fake provider, or a delivery driver who has their ID stolen so the fraudster can secure a policy with the sole intention of committing claims fraud.
In 2019, 760,000 cases of application fraud were detected, worth £1.4billion . The fact these were detected demonstrates how the market has been building its fraud prevention practices using ID validation techniques at the point of application, quote and post policy inception – often based on public and industry shared data. While these techniques can be effective, they are often time-consuming, labour intensive and can still leave gaps in knowledge and insurance providers exposed to fraud.
The question has been how to build resilience against ID fraud based on the information provided at the point of application. The answer is to leverage the intelligence linked to the applicant’s email address.
Of all the pieces of data provided in the application, email address can now be one of the most powerful in detecting application fraud.
Email is a unique global identifier and an integral part of everyday life. No two people will have exactly the same email address and changing email is difficult because of the links to all of an individual’s online accounts. Despite the growth and prominence of mobile messengers and chat apps, in 2019, the number of global e-mail users amounted to 3.9 billion and is set to grow to 4.48 billion users in 2024 . 91% of users have the same email address for more than 3 years, and 51% have the same email address for more than 10 years . Above all, an email address is one of the most commonly used components of an online transaction and therefore unlocks digital engagement and transactions in every industry.
Unique email addresses are connected to many attributes including IP addresses and domain names. Looking at an email address and the Digital Footprint that goes with it, based on how it has been used online, it is now possible to create a risk score built on a range of factors such as whether the email and domain even exist, or whether the email bears close resemblance to the proposer’s name for the policy.
The risk score is built on billions of transactions from global payment processors and other online industries to provide an instant score based on an individual’s email address information, at the point of quote.
This scoring model can be used to automatically validate every quote that comes through to indicate whether the ID used for the application could be fraudulent. It can also be used to help inform pricing decisions alongside a wide range of data enrichment datasets, including publicly available data and policy history data, property, vehicle and environmental.
In the fight against insurance fraud, email address intelligence-based risk scores can enable insurance providers to deliver a streamlined quote and onboarding service to customers in the knowledge that those applications with a higher risk of ID fraud will be flagged for further investigation.
Designed to complement the insurance market’s existing counter-fraud armoury, email address-based risk scores may provide the crucial piece in the jigsaw in understanding application fraud risk.
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