Study: 30% of consumers victims of insurance identity theft

Nearly 30% of Americans have been victims of insurance-related identity theft, and the fraud appears to disproportionately affect young workers, according to a new report.

The study, published by Aite, comes at a time when cybersecurity is an urgent issue for businesses, and follows a period when numerous security breaches have been reported by large companies, including insurance plans. disease.

“Unfortunately, data breaches have become more common in recent years as fraudsters seek access to a consumer’s personally identifiable information. Yet there is another sometimes overlooked scam and that is that the scammer is often someone known to the victim, ”said Michael Trilli, Aite Group Research Director. “Regardless of the identity of the fraudster, today’s environment places a responsibility on insurers to ensure that their customers can transact digitally and with peace of mind. “

2 types of crimes studied, many victims

The report looked at two main types of identity theft crimes: app fraud, where an unauthorized person uses a consumer’s identity to purchase an insurance policy, and takeover. account (ATO), when an unauthorized person uses an existing insurance account in a manner.

The data was collected in a survey of more than 8,000 US consumers aged 18 or older. It found that 27% of U.S. consumers have experienced insurance-related identity theft in the past two years. Of those who experienced identity theft for insurance purposes, 22% did so with their health or dental insurance plan, 19% with their life or dental insurance policy. annuity, and 18% with a non-life insurance policy. The largest age group of consumers affected by insurance identity theft was between 31 and 39 years old.

One of the main findings is that faceless international hackers were not the main problem. The data showed that the affected consumer’s family members were the bad actors most likely to submit a fraudulent claim, and many ATO victims knew the person who stole their existing accounts, either as a member of the family or as a known partner.

Fewer victims were baby boomers, more were millennials

The finding that baby boomers – older consumers – were less likely to fall victim to this type of fraud has also confused conventional wisdom to some extent. Instead, Millennials aged 31 to 39 were the age group most likely to suffer from insurance identity theft.

And knowledge of consumer scams isn’t necessarily a shield against being a victim: The study found that 38% of those who were victims of identity theft said they were very knowledgeable about scams; while 32% of those who were not victims of theft said they were very well informed. Overall, being told about these scams doesn’t seem to offer much protection.

The report included recommendations for insurers looking to tackle this type of fraud. These include:

• Develop an end-to-end strategy. In addition to detecting fraud early on, part of the solution is also to apply fraud mitigation tools before a claim is paid (not after it is paid) as a safety net for cases where fraudsters escape the authentication process.
• Think differently about authentication methods, as current methods may not be sufficient given the amount of personal information in the hands of fraudsters due to data breaches.
• Replace obsolete methods with biometrics. “Whether physical or behavioral, these methods will be more reliable than passwords or knowledge-based authentication and contribute to a better user experience,” the report says.
• Develop a robust and transparent recovery process because a company’s brand is also affected.
• Focus on consumer education. “Bring education on information protection and various scams, what to do with victimization, and perhaps the most difficult but most useful, teaching customers that the face of scammers could be family.” and friends, ”the report says.