In this latest Opinion piece, James Burton, senior director of insurance product management for U.K. and Ireland, LexisNexis Risk Solutions, looks at ID validation. In an increasingly online world, knowing who are communicating with is vital and checking emails, plus cross-referencing, is the way ahead.
Robust identity validation has become a critical element of the customer onboarding process thanks in large part to the rise of ID fraud related crimes such as ghost broking and as fraudsters look to take advantage of the pandemic. The challenge has been to make that validation process stronger and more automated while avoiding any unnecessary or unwarranted friction with a new customer. The answer is to be found in the email address provided during the application process. Email address intelligence-based risk scores are set to boost the insurance market’s resilience to ID fraud, helping to flag applications that may need further investigation.
Back in March 2021, as the UK emerged from its third National lockdown, the Insurance Fraud Bureau (IFB) and City of London Police’s Insurance Fraud Enforcement Department (IFED) urged the public to watch out for fake car insurance deals advertised online. They highlighted how ‘Ghost Brokers’ frequently promote unrealistically cheap car insurance on social media and sell on fake policies using stolen ID. Then in June this year, Aviva confirmed fraudulent policy applications and Ghost Broking grew by 34% in 2020.
Front of mind are drivers who cancelled their cover in one of the national lockdowns and are now back in the market for insurance. Then there are the thousands of novice drivers who had their driving tests cancelled in 2020 and plan to re-book and hopefully pass their test in 2021.
ID fraud in insurance was already on the up prior to the pandemic. Figures revealed by the Association of British Insurers in 2020 showed that cases of insurance application fraud in 2019 rose over 200% on the previous year. While application fraud encompasses deliberately mis-stating data such as previous claims in the application to get a cheaper quote, it also includes the use of stolen or fake ID to buy insurance to sell on, often to unwitting younger drivers or high risk drivers in search of a cheap policy.
Building on existing application fraud detection techniques using public and shared industry data, insurance providers can now use email address intelligence in their counter fraud armoury.
An email address provided in the application process can unlock digital engagement across many industries to help validate an individual’s ID. When you consider that 91% of email users have the same email address for more than 3 years, and 51% have the same email address for more than 10 years, changing an email address is something most of us would rather avoid. It has become fundamental to how we function in our day to day lives – even more so over the past year.
The key is the digital footprint that goes with each email address, based on how it has been used online. Every email address is unique and connects to many attributes including IP addresses and domain names. By using billions of transactions from global payment processors and other online industries we can provide an instant risk score to indicate whether the ID is genuine or could be fraudulent. Risk is assessed by evaluating metadata such as whether the email and domain even exist, or whether the email bears close resemblance to the proposer’s name for the policy.
As well as automatically validating every quote that comes through, the email address risk score can bring a new layer of insight to help inform pricing decisions.
Knowing with a high level of certainty that an online applicant is who they claim to be at the point of application, quote or post policy inception is now possible without any detriment to the speed of service for the customer. Email address intelligence-based risk scores provide an instant understanding of risk, complementing existing ID Validation techniques while helping to plug potential gaps in knowledge. Understanding risk early in the customer journey means potentially fraudulent business can be avoided and innocent individuals can be protected from having their identity compromised.