Identity verification Before the advent of covid-19, the insurance sector was booming all along. Since the pandemic, insurance businesses and companies are facing a lot of challenges. According to a 2019 survey by Allianz, there was a 4.4% rise in insurance filings. The same survey group conducted research in 2018 which showed that life insurance went down from 4.8% to 2.8%. On the other hand, Property and Casualty (P&C) insurance fell short from 5.4% to 4.3%.
Insurance Scams and Their Impact
The one main reason for the deteriorating insurance industry is the prevalent scams. Many service providers are not aware of the fact that this could result in premium rates going higher and higher with each passing day, having a significant impact on the customers. A research report shows that 8.3 billion US dollars are lost each year in the insurance industry due to these scams. Such losses are covering up by genuine and innocent customers that have nothing to do with these crimes.
Even though insurance service companies implement a number of rules and regulations to prevent financial crime such as money laundering, tax evasion, bribery, corruption, etc., they are often not able to enforce proper due diligence. Due to the lack of infrastructure, these traditional policies and procedures are easily outwitting by bad actors using sophisticated technology.
Cybercriminals create synthetic identities through stolen information so that they can impersonate genuine insurance holders and carry out their nefarious acts. Identity verification systems present a viable solution in this regard. Insurers and policyholders can now get their identity verified before filing Insurance claims and onboarding with a new insurance business.
Watch Out for These Insurance Scams
Application Fraud or NAF
When we talk about the insurance industry, New Account Fraud (NAF), also known as application fraud, remains one of the biggest concerns. NAF consists of an identity thief stealing another person’s personal ID documents to hijack the identity and to create a new account. This type of identity theft often has serious consequences not only for the service provider but also for the user whose information is compromised. Not enforcing Know Your Customer (KYC) and Anti Money Laundering (AML) compliance in the first place can lead an insurance business to hefty fines and penalties, leading to a loss of revenue and a drop and their sales opportunities.
Data Security Loopholes
Data security breaches are the second most common risk in the insurance industry. Like all other industries, the insurance sector is always on the verge of security vulnerabilities. According to an estimate, nearly 100 million people are subjecting to identity theft crime through associating with false insurance companies yearly. These types of instances can be taken down significantly by AI-based robust identity verification solutions to verify genuine insurance brokers and customers onboarding with these businesses
Ghost Brokers – Seemingly Honest Insurers
Ghost brokers are individuals who seem to pose as legitimate insurance dealers. But they are actually selling fake and forging policy documents to car motorists. These impersonators play the role of an impersonator trying to bag a false insurance deal between a legal company. Legitimate customers, thereby deceiving them both. Businesses operating in the insurance industry should incorporate identity-based checks that can enable. Them to stop scammers and identity thieves before they associate a corporate relationship with them.
The Benefits of Digital Identity Verification
Identity verification performed at the time of customer onboarding should be transparent and according to globally acclaimed standards and policies. A digital Know Your Customer process can guarantee that customers of a business are legitimate and have a genuine identity. These automating KYC solutions are built using artificial intelligence models that could be either integrating or installing at insurance businesses, ultimately enabling them to cut short cybercrime and fraudulent instances. Below is a list of some aspects of how identity verification helps insurance companies.
Document authentication solutions allow insurance companies to identify and verify their customers using identity documents. These document-based checks verify if a document is authentic or not, extract relevant information. Cross-check it against the data provided by the user in the first place, ultimately mitigating identity theft at scale.
Facial Biometric Authentication
Service providers of digital identity verification systems incorporate facial recognition technology to develop state-of-the-art security mechanisms. With modern facial biometric verification, users can onboard with a business through a scan of their face in an instant. Their biometric profile can later be using to carry out future authentication