Articles - Role of the email address in flagging application fraud

It’s never been more important for insurance providers to limit their exposure to fraud to stem their losses and the impact this has on the rising cost of premiums for the honest majority . Underlining the continued drive to drive out fraud, in November 2023, Insurer Aviva said it had uncovered more than 9,250 instances of fraud in 2022 – saving customers £120m . Finding fraudsters at the point of application, quote or post policy inception is the ideal scenario, stopping the issue before it develops and saving precious resources down the line.

 By Bruce Williams, product manager, U.K. and Ireland, LexisNexis Risk Solutions, Insurance

 However, this can be labour intensive and has the potential to create friction. The answer is within the market’s grasp however, as it lies in the applicant’s email address and the digital footprint behind it.

 1% of insurance applications flagged for fraud
 Consider that in recent tests using email address intelligence, we uncovered that 1 in every 100 insurance applications had a strong fraud marking. Then consider the volume of insurance quotes produced each and every day. The scale of fraud risk is clear, but so is the opportunity to effectively tackle the problem using email-based fraud risk scores.

 As the economic squeeze persists for many households and insurance premiums continue to rise , insurance providers know that delivering a great customer experience is vital. Consumers demand a quick and friction-free application process to get fair and accurate quotes and every insurance provider is working hard to make sure their customers have the right level of protection in place at right price.

 Insurance providers are also looking closely at the customer journey to ensure this is as streamlined as possible at application and quote stage. This means they must carry out the right level of validation checks, in a swift and seamless fashion.
 Frictionless fraud detection

 The application process naturally requires that the information provided by the customer is validated, verified, and enriched. But the extent to which fraud detection occurs at this stage is unquestionably a delicate balancing act. Lean too far one way and the door will be left wide open for fraudsters. Lean too far the other way and an insurance provider risks a creating a poor customer experience with applicants frustrated by a barrage of security checks. This difficulty is amplified by the current economic environment with fraud on the rise due to the cost-of-living crisis .

 Application fraud is one of the biggest problems in the insurance industry with Action Fraud reporting that from October 2022 to October 2023, the average victim of a ghost broker lost around £1,288, a rise of 50% since 2019 . This reinforces why the insurance market is focusing so heavily on the robustness of front-end fraud detection.

 Spotting cases of application fraud has traditionally relied on public and industry shared data, often post-policy inception. These checks can be effective, but are often labour-intensive. There is also the risk of the fraudster slipping through the net if they are not spotted before policy on-boarding.

 Meeting the demand for a quick, efficient, and automated method of checking identities at the application process, email address validation through solutions such as LexisNexis® Emailage® Rapid, our powerful fraud risk scoring solution based on the applicant’s email address and other supplied information, now give insurance providers confidence in spotting potential fraudsters before they are allowed through the front door.

 Digital Footprints
 The key is the digital footprint that accompanies an individual email address, based on how it has been used online.

 An email address is a unique global identifier because it used in virtually 100% of all online transactions, rich with transaction history and behaviour and difficult to change because it links to multiple online accounts. It means a fraud risk score can be built based on billions of global payment transactions including 82,200 fraud events shared on average daily . This instantly verifies the existence and age of an email address and its domain – this is powerful insight for understanding if a ghost broker could be at play. It will confirm the fraud risk and if the email has been associated with fraud in the past and which industry that fraud may have occurred. Individuals are accurately placed into Fraud Risk Bands and given a predictive risk score.

 Drilling down deeper into the digital signposts of fraud, the Digital Confidence Score (DCS) is another set of outputs that can be used. DCS gives scores for pairs of inputs, such as email and IP address, email and shipping address or IP and billing addresses, and generates an overall confidence score. The higher the score, the higher the level of confidence that these inputs belong to the same digital identity.

 Email address intelligence supports streamlined risk assessment
 The challenge for the market has been in strengthening identity checks without causing a detriment to the customer experience. The banking sector has been using email intelligence-based tools to tackle identity fraud for a while. Now the insurance market can immediately identify if an application has a fraud risk through a real-time risk score as part of a streamlined risk assessment process. With the average fraudulent insurance claim costing over £15,000 and fraud on the rise , identifying even 1% of potential fraudsters early through email address intelligence could save the industry millions each year.


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