2024 Trends in the Insurance Industry
Synthetic ID Fraud and Ghost Broking
Reducing the cost of fighting fraud is fast becoming of equal importance as fighting the fraud itself, in the insurance industry. And with fraud typically adding an extra £50 to the average motor insurance premium, it’s little surprise that identity fraud management is fast becoming a major profitability differentiator in the market.
Fighting Synthetic Fraud
Standard identity verification is no longer providing sufficient levels of protection against the latest and most sophisticated forms of fraud targeting the insurance sector. Synthetic identity fraud is a major challenge to any sector that relies on fast identity verification at onboarding, because the presenting customer details appear to be genuine and pass all but the most stringent checks. It’s only long after the verification and onboarding process completes, that a vendor will discover anything is wrong.
To protect against this growing threat, businesses must establish additional layers of reliable identity verification sources at onboarding to gain stronger assurance that the presenting customer is genuine. Bank verification provides unique identity matching over and above that of an address match, which can mean operational efficiency gains, as well as and lower fraud referral rates. Furthermore, by utilising a new breed of data released through PayUK, insurers will now be able to receive match rates significantly higher than previously available through other solutions.
See more around how LexisNexis® Bankers Almanac® Validate™ Safe Payment Verification can help you build further trust around your customer journey here.
Opportunistic Claims Fraud
Similar to synthetic fraud, the challenge of opportunist claims fraud lies in the fact that the trusted customer identity is being presented. First the Covid-19 pandemic and now the continuing cost of living crisis have both fuelled higher levels of first party fraud, where individuals adjust or misreport their own identity or circumstances for fraudulent gain. Sophisticated fraudsters are using this opportunity to further evolve and refine their strategies.
Opportunistic claims fraud experienced the most substantial growth over the past year, rising by almost 70% according to our joint report with Insurance Post. This type of fraud was also considered across the industry as the most challenging to identify, highlighting the need for robust fraud detection measures and prevention strategies. In 2024, we expect volumes of this typology to continue to rise.
Digital Transformation
Digital-first strategies have been at the forefront of insurers’ priorities for some time, as customers yearn for fast, frictionless and even immersive experiences. Achieving this means leveraging both technology and data to become fully customer centric.
A seamless customer experience can’t be achieved without seamless access to data. Ridding the organisation of data siloes and achieving a single customer view will not only help firms better understand customers, but also aids in the fight against fraud.
Understanding customers means understanding their behaviours too. Fraud strategies must therefore carefully map the multitude of channels and interactions that customers use to engage with their businesses. Linking together the full customer journey in this way will help the organisation to become more digitally resilient to fraud, as a whole.
Agile and holistic are two often-used terms in the context of fraud management, and for good reason. They point to the same need for a 360-degree view of the customer as an imperative to improve risk assessment.
Behavioural Biometrics
The Identity Trust Podcast episode exploring trends in fraud prevention '7 Trends That Will Shape the Fraud and Identity Landscape in 2024', explores how behavioural intelligence and biometrics has shifted from a nice-to-have, to an essential part of any consumer IDV process.
The ways in which a user interacts with their device provides invaluable – and previously unavailable – insights and an additional protective layer to the verification and authentication process. Keystroke cadence, hesitation, spelling errors, these are just some of the ways the technology can determine whether the device user is behaving as expected, or even appears to be human. Applied at any point in the user journey, behavioural biometrics provides a defence against some of the most challenging varieties of scams aimed at consumers.
LexisNexis® BehavioSec has a strong track record at detecting fraud incidents quickly, allowing organisations to provide a seamless experience to genuine users and confidently protect your customers.
Generative AI
Adoption of AI is one of the hottest talking points across industry in 2024. Generative AI can offer businesses multiple efficiency benefits, from assisting with underwriting, to triaging customer interactions.
However, fraudsters are also embracing AI to greatly enhance the scope and sophistication of fraud attacks. How best to leverage AI to serve customers, as well as to protect customers from AI-enabled fraud will no doubt be a major strategic focus and an opportunity for technology vendors to partner with customers, in the coming years.
LexisNexis® Bankers Almanac® Validate™
Data, trust, and the customer experience
The insurance industry would not be able to operate without the trust between providers and customers.
Insurers clearly have a much bigger role to play in our society and economy than just protecting against risk. “A customer-centric approach” is a well-used phrase – meaning a variety of things, from more personalised plans, to time-saving operations utilised through digital transformation to a smooth experience in claims. Reimbursement is an evolving trend in both regulation and expectation in 2024.
A seamless claims experience is a prerogative for both organisations and customers, but digital claims bring with them the risk of more claims fraud. At point of claim, it is essential that the claims team have confidence they are paying the correct individual. It’s also the last step in the journey to uncover any material or potential fraudulent behaviour. Bank account verification checks ensure that the beneficiary account is in fact owned by the payee, giving insurers confidence to make payments faster and ensuring costs for recouping funds are kept to a minimum.
Solutions such as LexisNexis® Bankers Almanac® Validate™ Safe Payment Verification can help address this issue of trust and fraud prevention. Speak to our team to find out more.
Conclusion
Insurance providers, like many other consumer-facing sectors, are experiencing a challenging period of rapid disruption fuelled by a swathe of environmental factors, including technological advances, social and economic pressures and the rise and proliferation of complex fraud attacks.
In the face of such challenges, firms must be prepared to fight fire with fire, using AI-driven technology implemented at key points in the customer journey to detect and prevent fraud. Collaboration is also key. It’s a fact that fraudsters work in supportive networks, helping each other to profit. Firms must therefore do the same, working together and sharing intelligence to help stop fraudsters infiltrating the sector and securing policies illicitly for personal gain, and in doing so pushing up premiums for the rest of us.
Keep your eyes peeled, as later in the year we will be launching another key trends report in conjunction with Insurance Post – featuring interviews with practitioners tackling risk management for major players in the sector.
