At our recent insurance summit we heard from a host of industry experts outlining widespread concerns around insurance fraud.
Among them was reformed fraudster and global fraud consultant Frank Abagnale. He presented his views on the future of fraud noting how it is likely to become much ‘darker’ in the future, primarily driven by cybercrime and more sophisticated routes to financial crime.
The insurance sector as a whole has already seen an evolution in fraudulent behaviours. Fraud is becoming far more organised and the days of imitating someone through a fictitious name has evolved to the point where genuine identities are being stolen on an industrial scale.
Abagnale highlighted how fraudsters were now preying on the young by stealing children’s identities and sitting on the information until the unwitting victims reached a credit-worthy or credit-mature age. From there, stolen IDs are used to release funds from lenders.
But often due to the victims’ age, inexperience and innocence there is generally a significant time-lapse before they realise what’s happened. As a result, the traditional means of checking applicants‘addresses, names and personal details, may simply not be robust enough and credit checking is being bypassed.
At the same time, payment fraud is a now huge area where insurers have increased exposure to risk and should be looking at how they protect themselves.
Cybercrime is also rising given the vast majority of insurance transactions being done via online channels with exposure to losses also now far greater. Social media, device technology and many more data assets are being manipulated for the benefit of the villains as the processes behind fraud becoming much more personal and much more intricate.
Detection is also now getting harder as it’s now relatively easy for a fraudster to piece together differing elements of an individual’s background and create a genuine-looking identity.