James Burton, Senior Director of Insurance Product Management for U.K. and Ireland at LexisNexis Risk Solutions discusses the rise in ghost brokers and possible solutions.
Ghost broking is not a new problem for the motor insurance market, but all the signs suggest it is getting worse. With the media reporting that a ‘winter of discontent’ is on the horizon, that could cause financial pressure for many individuals and households, the opportunities will be rife for determined fraudsters to cash in on people’s financial vulnerability.
However, the tools to spot ghost broking activity prior to policy inception have evolved. This is helping insurance providers conduct robust identity (ID) validation checks at the point of quote to uncover suspicious activity, without causing friction or impacting a streamlined quote experience for the vast majority of honest customers.
The use of stolen or fake identities to procure insurance – either to sell fake motor insurance policies as a ghost broker or to pursue staged claims – has heightened because of the pandemic. In June 2021, Aviva confirmed that the number of cases of application fraud and ghost broking it had detected had grown over a third in 20201.
Ghost brokers often use social media to target young drivers and those with driving convictions, to offer cheap insurance. In recognition of this fact, the Insurance Fraud Bureau2 issued a stark warning earlier this year to the many newly qualified young drivers who had to delay their driving tests due to the pandemic: beware of scams offering fake car insurance policies on social media. It’s not just the financial loss for drivers who have fallen victim to a scam, ghost broking puts uninsured drivers on the road, and that has bigger safety and cost implications for all road users.
Email address intelligence and shared fraud data direct into insurance workflows at the point of quote, accessed through a single point of entry to a wide range of insurance-specific data, is now helping to solve this challenge, enabling insurance providers to understand the risk of fraud in real-time.
ID validation checks to help confirm the applicant is who they say they are, have become integral to a swift risk assessment process. Today, insurance providers can take advantage of data enrichment and high-volume capability platforms such as LexisNexis® Informed Quotes, in order to access a single point of entry to a whole host of risk data for the insurance market. This includes industry databases of known fraudsters such as Synectics Solutions National SIRA database3.
The key to successfully matching the insurance providers’ customer data against the National SIRA database is highly dependent on the number of datapoints that can be matched. As such, email address and telephone numbers are now included in the datapoints delivered to insurance providers via LexisNexis® Informed Quotes, providing a new and vital step in ID validation and fraud prevention processes.
Insurance providers can also access quote behaviour data through the same platform to build a further understanding of potentially fraudulent activity. LexisNexis® Quote Intelligence can be particularly valuable for identifying changes to named drivers during the quote process and whether a link can be made with the main proposer.
The next advances in identity validation use a piece of information provided as standard during the application process – the applicant’s stated email address. Our email address tends to be unique to each of us and will usually stay with a person over time. It may not be a surprise to know that 91%4 of people have had the same email address for three years or more, 51% for more than 10 years.
This makes an email address a unique and persistent global identifier that is, in most cases, linked to multiple online accounts and transactions creating digital footprints. It could in fact become one of the most powerful tools for detecting application fraud.
LexisNexis® Emailage® Rapid is a powerful fraud solution based on the email address and other personal information provided during the application or claims process. It’s already working to tackle identity fraud in the banking sector, and now the benefits are being extended to the insurance sector. It provides an instant risk score5 at the point of quote, based on billions of transactions from global payment processors and other online industries, including over 82,000 fraud events shared on average daily6.
The score indicates whether the identity is genuine or whether it could be fraudulent 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 quotes, the score can also inform pricing, underwriting and claims decisions alongside a wide range of data enrichment datasets.
The rise in ghost broking has heightened the demand for data and technology to deliver swift ID validation and flags for fraud risk, without creating friction for genuine customers. At LexisNexis Risk Solutions, our insurance industry solutions help improve identity verification processes and will continue to evolve to help the market keep pace with the ever-changing tactics of fraudsters.
James Burton | Senior Director of Insurance Product Management for U.K. and Ireland | LexisNexis Risk Solutions
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