Identity fraud in the insurance market
As a result of the rise in identity fraud, Action Fraud, the City of London Police, Cifas and Equifax have launched an identity fraud campaign in an attempt to increase awareness and encourage people to go further in protecting their identity. But it’s not just members of the public that have to be vigilant.
Identity fraud now costs the UK £5.4bn a year, and the insurance industry is keen to banish this costly trend. Identity fraud is a problem across all areas of insurance, but it is most prevalent in motor insurance. False motor insurance claims make up £835m of the total £1.3bn losses a year to the insurance industry.
The internet has made it much easier for fraudsters to cash in; stealing identities through hacking and phishing, as well as taking advantage of online applications which remove the need to apply for products in person or over the phone.
Opportunistic identity fraud is rife in this required, and often expensive, sector of the industry. It can take the form of policyholders looking to reduce their premiums, for instance a parent taking out a policy as the main driver and adding the child as a named driver.
But identity fraud can also be seen in the murkier world of organised crime; false insurance policies used to protect criminals from being caught out from uninsured driving, and facilitating money laundering. Ghost broking companies are common, with bogus companies setting up policies using stolen identities, for people who might struggle to get a policy legally. False claims are also a problem, with people submitting multiple claims under different names.
The war on identity fraud must be collaborative effort, says Simon Dukes, Chief Executive at Cifas, who encourages companies to take data security more seriously. Awareness needs to grow for the public too. “We welcome this new campaign and urge everyone to take more responsibility in protecting their personal information and avoid making themselves an easy target for the identity fraudster.”
Insurance companies must be more vigilant with their Know Your Customer checks and use every available tool in their arsenal.