Over the last few decades, businesses in all industries have been taking steps to implement and grow digital experiences for their customers. When the COVID-19 pandemic began in early 2020, resulting shutdowns meant fewer face-to-face customer interactions, and insurers had to rely on processing policy transactions over the phone and online. At the same time, their employees had to pivot to home offices to ensure minimal interruption to business and customer service. As all this digital activity has increased, so have the number of fraud incidents, and insurers must rethink their fraud mitigation strategies.
To get a better perspective of how these digital trends are impacting the market, LexisNexis Risk Solutions commissioned Aite Group to survey U.S. subject-matter experts and decision-makers of fraud prevention strategies at insurance carriers. Findings from this study are presented in the impact report, Insurance Fraud: Rethinking Approaches in the Digital Age. The full report is now available, and I am pleased to share a few highlights below.
Digital activity is here to stay
As I mentioned above, consumers’ digital interactions with insurers have increased compared to pre-pandemic levels, and this “new normal” is expected to continue. According to survey findings, most carriers experienced an increase in digital activity, particularly with quote requests and claims processing. In underwriting, data submission is one area that is seeing a significant increase in online activity. This increase in activity – especially among consumers not accustomed to using online transactions – can increase exposure to fraud, for both the consumer and insurer.
As consumers become more accustomed to interacting online, it’s natural that they will expect these convenient transactions to be part of their customer experience. At the same time, insurers are taking advantage of this digital opportunity to provide a convenient option for their policyholders to manage their communications. This comes with risk, however, as two-thirds of survey respondents agree that the increase in online interactions has resulted in higher fraudulent activity. Data breaches, changes in consumer behavior and carriers’ online assets are top drivers of fraud activities.
Implement mitigation strategies now
The picture is not all bleak, however, as insurers are making investments to mitigate online fraud. As we share in our impact report, it is important that insurers include a multilayered approach in their mitigation efforts. Luckily, there are a number of solutions available to insurers to help protect identity and customer accounts, such as identity verification, behavioral and physical biometrics, scoring and password-free authentication. So far, adoption of these solutions varies, and as no single technology can detect and prevent all fraud, carriers are advised to implement a multilayered approach to their fraud defenses.
The survey asked participants what benefits they experienced when utilizing various fraud management solutions. Around half of respondents said that increased accuracy is a benefit provided by most fraud management solutions, while only about 33% of respondents see ease of deployment as a benefit. These experiences by carriers underscore the need to implement a combination of solutions across all of their functional areas to strengthen their fraud defense mitigation.
Take advantage of opportunities
Myriad opportunities exist for insurers to mitigate and prevent fraudulent activities. These make it easy for carriers to interact with and improve their customers’ experiences. To understand and take advantage of these opportunities, LexisNexis Risk Solutions recommends that carriers recognize that digital interactions are the new normal and they shouldn’t overlook the resulting increase in fraud potential. Carriers should also adopt a multilayered approach to fraud prevention and balance that investment across their functional areas.
Learn more about how you can say yes with confidence and take advantage of the opportunities afforded by strengthening your fraud mitigation strategies! Download Insurance Fraud: Rethinking Approaches in the Digital Age, or visit our website today!