How Insurers Are Using Email to Fight Online Fraud
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How Insurers Are Using Email to Fight Online Fraud

Computer hacker with mobile phone

Email is now being used to fight the 21st century epidemic of application fraud and ghost broking.

The pandemic has brought about an epidemic in fraud, with reports suggesting there has been a 33% rise in fraud, including identity fraud related crimes. Insurers have also suffered. Aviva, one of the UK’s leading general insurers, has seen identity fraud on insurance applications grew by a third in 2020.

Aviva also said 'ghost broking' now represents approximately 20% of policy fraud. That's when a fraudster poses as an insurance broker to fraudulently take out motor insurance policies. Ghost brokers typically target vulnerable customer groups, such as non-English speaking communities and young drivers who face higher premiums, who are left with worthless policies, Aviva said. The practice also increases insurance costs for honest customers.

Over 90% of people have had the same email address for three years or more and over half (51%) for more than 10 years.
James Burton, senior director of insurance product management for U.K. and Ireland, LexisNexis Risk Solutions
James Burton.jpg

Application fraud may have escalated during the pandemic but it’s a problem that’s plagued the industry for years. In 2019, before the pandemic, cases of insurance application fraud rose by more than 200% on the previous year, according to data from the Association of British Insurers.

The industry has found it difficult to spot suspect applications, especially as insurers and brokers have focused on improving their customer experience by automating the quote and application process. They risk putting off customers (the vast majority of whom are genuine) by asking them too many questions to verify their identity. But leaving it until after the policy has been issued puts a lot of pressure on an insurer’s counter-fraud team to spot the fraudsters.

So, insurers have responded to this challenge by using technology that has already helped the banking industry tackle fraud.

Emails Are Digital Footprints

Instant email address validation while customers are applying for quotes can help spot potential cases of application fraud early in the process. An email address is one of the most common components of an online transaction. Over 90% of people have had the same email address for three years or more and over half (51%) for more than 10 years, and as each individual email address creates a digital footprint it can be one of the most powerful tools for detecting application fraud, according to James Burton is senior director of insurance product management for U.K. and Ireland, for LexisNexis Risk Solutions.

Solutions that use data from billions of online transactions, including tens of thousands of frauds shared across industry every day, are now available to provide insurers with a risk score based on email address to help automatically validate quotes as they come through.

It can indicate a genuine identity, whether the identity has previously been linked to fraud or whether it could be a fraudulent ID. It can also provide additional metadata points, such as whether the email address and domain even exist, when the email address was first seen, or whether the email address bears a close resemblance to the proposer’s name for the policy.

The score can also be used to inform pricing and underwriting decisions alongside a range of other data, including publicly available data, policy history, property, environmental and prior claims information.

By using platforms offering a single point of access to a wide range of data, insurance providers can access information quickly, at the point of quote, so that the necessary checks become part and parcel of a swift risk assessment process. It’s an irony that email addresses — the oldest and most basic use of the worldwide web — is now being used to combat the 21st century scourge of online fraud.


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