Shane McCabe, strategic account manager, Insurance, Ireland, LexisNexis Risk Solutions
An Garda Síochána (Ireland's National Police and Security Service) lists the 'Advance Fee Fraud of Ghost Broking and Car Insurance Fraud' as one of the six most common types of fraud happening in Ireland today. A new survey by LexisNexis® Risk Solutions of Irish insurance customers certainly seems to back this up. Our findings show that over a third (34%) have been tempted by an advert for cheap insurance on social media – a common sales channel used by ghost brokers - and 16% of 17-24 year olds have actually bought insurance through a social media advert. Equally concerning is the fact that just 24% of the people surveyed know about ghost brokers.
Ghost brokers promote unrealistically cheap car insurance on social media and sell on bogus policies using stolen ID to unwitting younger or high-risk drivers who are in search of a cheap policy. Little wonder over half (58%) of the insurance customers we surveyed are worried their identity could be compromised for insurance fraud and the vast majority (89%) now expect insurance providers to undertake identity checks.
There is no denying that fraud costs the Irish insurance industry dear. Aside from ghost broking, insurance providers face the growing problem of people deliberately misstating information in an application for a cheaper quote – 25% of Irish insurance customers in our study thought that this is somewhat or completely acceptable, rising to 43% of the 17-34 year old population.
Despite investment in educational campaigns warning of its danger, an estimated €200 million is lost to insurance fraud each year which inevitably impacts upon insurance premium prices for innocent policyholders. In fact, approximately €50 on every motor insurance policy goes towards covering the cost of fraudulent claims on an annual basis.
Countering fraud starts with confirming that an applicant is who they say they are and not linked to fraud, often using public records data and data shared amongst insurance providers. This continues to provide a strong basis for identity validation, but can prove time-consuming and may cause friction when the vast majority of genuine customers deserve a quick and painless application and purchase experience.
The next evolution in identity validation uses email address intelligence. This has worked to great success in the U.K insurance market where it is providing flags for fraud early in the application process and helping to cut cancellation costs. Now insurance providers in the Republic of Ireland are set benefit.
An email addresses is a unique global identifier and one of the most commonly used components for any online transaction. An email address is also linked to multiple online accounts and transactions. This means each individual email address creates a digital footprint which can make it one of the most powerful tools for detecting application fraud.
Solutions such as LexisNexis® Emailage® Rapid provide an instant risk score at the point of quote to indicate a genuine identity, whether the identity has previously been linked to fraud or whether it could be a fraudulent ID created to either procure insurance with the sole intent of making a fraudulent claim, or to sell insurance on as a ghost broker. It can also indicate 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.
This solution leverages billions of online transactions and email address data points, including 82,200 fraud events shared on average daily.
Internet penetration stands at over 90% in Ireland and as nearly one third (32%) of younger people aged between 16 and 29 years either bought or renewed existing insurance policies online last year, it is easy to see how vulnerable they might be to fraud but also how susceptible the insurance market is to online fraud.
As the volatility of the macroeconomic environment continues unabated, it is more important than ever for insurance providers to conduct robust fraud prevention strategies. Innovations such as email identity validation can help to boost the Irish insurance market's resilience to identity fraud, protect unwitting motorists from the threat of ghost brokers and ensure a streamlined quote experience for the genuine customers.
In February 2020, LexisNexis Risk Solutions acquired Emailage, a fraud prevention and risk management solutions provider. LexisNexis® Emailage® is a proven risk assessment tool that is fuelled by continuously updating global digital insights and uses a patented, proprietary analytic approach to reimagine fraud detection.
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