TransUnion and iovation Partner Up on Transaction Screening

As more U.S. consumers use digital platforms when engaging with insurance companies, new fraud challenges are likely to arise for insurance carriers. TransUnion (NYSE:TRU) and iovation, a TransUnion company, shared this news as well as recent industry fraud data today at InsureTech Connect 2019.

Among the 10 billion global online transactions iovation screened from Sept. 2018 to Sept. 2019, it identified 9.14% as risky in the insurance industry compared to 5.09% across all industries.

“The advantages of an online insurance offering is undeniable. It makes business processes more efficient and the consumer experience more convenient,” said Melissa Gaddis, iovation’s senior director of customer success. “However, as transactions move online, so will the fraudsters. With U.S. consumers becoming increasingly comfortable transacting with insurance companies online, we expect new types of digital fraud to emerge here like they have in other parts of the world.”

According to research from global market intelligence agency Mintel, in 2017 only 9% of U.S. consumers said that they used their health insurance provider’s mobile app. A year later, that number nearly tripled to 25% . Mintel also found that in 2019, 25% of millennials were interested in an online insurance application process while 29% of Gen Z consumers said they were interested in using mobile tools for their insurance.

Find out more details in this handy infographic here.

As mobile becomes more prevalent, TransUnion and iovation believe that insurers face several fraud challenges, including:

• Application – Fraudsters create accounts using someone else’s personal information, fake details or a mix of the two. They traditionally open insurance policies for fictitious beneficiaries, or alter and falsify application information to reduce their premiums. Attempted online first-party application fraud — when a person falsely applies for an insurance policy — is up 516% among iovation customers from 2015 to 2018.
• Bad Debt – Insurers provide coverage for a period of time for which they do not receive payment. This is caused by a lack of payment with a bad check, stolen credit card, etc. Bad debt is a particularly major issue for auto insurance carriers and typically makes up 1-2% of all personal automobile insurance premiums written.
• Ghost Broking – Fraudsters purchase insurance with false details or create false documents that look like they are from a legitimate insurance carrier. They then resell the policy to an unsuspecting victim, who is then not covered if an event occurs. Online third-party application fraud — when a person falsely claims to be a broker applying for another person’s insurance policy — is up 139% among iovation customers from 2015 to 2018.
• Account Takeover– This fraud occurs when someone not insured on a policy accesses it to either obtain sensitive information or dishonestly route an upcoming claims payment to themselves. This practice is more prevalent with life insurance policies. Preventing this fraud is critical to do without harming the customer experience.

“Fraud is now top of mind for many insurance carriers, especially as digital engagement becomes more widespread in the industry,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business unit. “As more prospective policyholders move towards using digital platforms, it’s incumbent on carriers to leverage all available tools to ensure they avoid fraud and keep costs down for both themselves and consumers.”