Identity fraud: A reputational challenge or opportunity

Fraud in the insurance sector is nothing new. For decades we have seen insurance companies and comparison websites dealing with false identities, misuse of facility, ghost broking and more. While we know that fraud in the insurance sector is under-reported there are positive moves being made with Cifas welcoming new key members.

Putting the brakes on stolen identities

We’ve recently welcomed GoCompare to our membership, now collaborating alongside members such as Direct Line, LV=, Allianz, Admiral, Hastings and Esure. Communication amongst these members is closing gaps and eliminating more fraud than ever before in the insurance sector, particularly in identity fraud.

Identity fraud against the insurance sector has increased substantially over the last three years and, although being underreported, is still one of the most frequently reported case types to our National Fraud Database. Usually the victims of identity fraud don’t lose any money, but they are put at risk for a third party claim against them.  This type of activity can be extremely damaging to the insurance company or quote providers reputations.  

How are the fraudsters finding victims

The information a fraudster needs to commit identity fraud can come from a number of different sources, but the two most likely are the internet or the individual themselves. This can be done by phishing emails, vishing calls, social engineering or even personal information the victim made available on their social media accounts.

Ghost broking is one of the main ways identity fraud is carried out. This is the selling of false insurance policies to, usually, innocent victims. False policies are most commonly advertised over social media sites and through phishing emails. These policies look like great deals to those in need of coverage, usually new drivers or those new to the country. When the victim signs up for the policy they offer up all of their personal details. The fraudsters will then use this information to sign up for real policies and sell these lower risk insurance policies off to their clients, leaving the victim with fake policies or nothing at all.

Filing fraud to improve insurers reputations

Many people find out they have been a victim when they receive communication from an insurance company about an account or policy that has been applied for in their name. Or sometimes the victim becomes aware when they attempt to claim something with an insurer and learn that they never had a legitimate account or policy in the first place. This is of course bad news for both parties, however it leaves an opportunity for the insurer.

If the insurer simply cancels or voids the policy without victim care processes, victims will be left feeling vulnerable wondering why this happened and if it could happen again. The insurer’s reputation is likely damaged with the probability of the victim becoming a future customer improbable. Situations like this are very damaging to reputations and cost insurers a lot of credibility.

However, if the insurer uses the opportunity to offer first class victim care with a report not only to the Insurance Fraud Bureau (IFB), to tackle the individuals behind the fraud, but also to Cifas, helping protect their identity from being used again, insurers can repair the emotional damage caused to victims and even enhance their brand's reputation.

Cifas members, in addition to filing the high risk fraud case, are able to add a ‘Victim of Impersonation’ marker to the victim's account making it clear that they are a genuine, innocent party. These markers are shared in real time across membership of over 500 members from the banking, lending, insurance and telecom sectors – all committed to protecting innocent parties.

You can find more information about our Identity Protection services where we have options for both Cifas members and the individual on our website. If you are already a member and want to make a filing or discuss a case please feel free to contact me, Gary Billingham, directly at Gary.Billingham@cifas.org.uk.