In 2019, 760,000 cases of insurance application fraud were detected, worth £1.4billion[i] – a 200% increase on the previous year. That’s before any pandemic-related fraudulent activity could be recorded. While it is good news these cases were detected, the sheer volume demonstrates how significant a problem application fraud has become and how much resource insurance providers are having to devote to tackle the issue.
ID validation checks to help identify application fraud pre or post policy inception can be labour intensive, time-consuming and prone to gaps in knowledge. They can also be an annoyance to the vast majority of customers who are genuine, just at the point when they are gaining their first impressions of a brand.
As reports suggest scammers are looking to take advantage[ii] of the fall-out from the pandemic, there is increasing pressure on the market to strike the tricky balance between strengthening their ID fraud detection capabilities while at the same time delivering a streamlined application process and great customer experience.
The solution has been found in the intelligence connected to the customer’s email address. Insurance providers typically validate ID using key facts provided by the applicant such as full name, address, date of birth. However, of all the pieces of data provided in the application, email address could become one of the most powerful in detecting application fraud.
An email address is a unique global identifier – and for most, an essential part of everyday life. For a start, no two individuals will own the same email address. Also imagine the time and effort It would take to change email address given all the links it has to online accounts. The statistics speak for themselves – 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[iii].
Knowing that unique email addresses are connected to many attributes including IP addresses and domain name, we can now create an instant email-based risk score for use at point of quote. Built on the email address and the Digital Footprint that goes with it, including its history, it includes 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. At the heart of LexisNexis Emailage® Rapid is billions of transactions from global payment processors and other online industries.
LexisNexis Emailage® Rapid risk scores can be used to automatically validate every quote that comes through to indicate whether the ID used for the application could be fraudulent and work best in combination with the insurance market’s existing front end, counter-fraud ID validation checks.
The application of risk scores based on email intelligence need not be limited to fraud detection – they can also be used to support pricing decisions when used in tandem with data enrichment datasets including publicly available data and policy history data, property, vehicle and environmental. They add a further layer to the picture of risk to help insurance providers price accurately and fairly.
Fraudsters are constantly evolving their tactics, putting the insurance sector under pressure to keep one step ahead. Bringing email-based risk scores into the application and quote process can strengthen the market’s resilience to application fraud without detriment to the customer journey and support pricing decisions based on a more comprehensive view of risk.
James Burton, Senior Director of Insurance Product Management for U.K. and Ireland, LexisNexis Risk Solutions.