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Digital insurance fraud spike offers market opportunity for biometric KYC providers

Digital insurance fraud spike offers market opportunity for biometric KYC providers
 

The rate of suspected global digital fraud attempts targeting the insurance industry increased 159 percent between Q2 2021 and Q2 2022, a new report by TransUnion claims. An industry response seems likely to involve more adoption of strong identity verification with biometrics.

The research examined intelligence from billions of transactions and more than 40,000 websites and apps contained in the TransUnion identity proofing suite.

According to the new report, industries witnessing the largest declines in the rate of suspected digital fraudulent activity in the forecast period included gaming, travel and leisure, and retail.

Insurance and logistics, on the other hand, both witnessed an increase. In terms of sub-categories in the insurance industry, first-party application fraud was the top insurance-focused fraud activity recorded.

“In recent years, we’ve seen fraudsters shift their industry focus each quarter,” explains Shai Cohen, senior vice president of global fraud solutions at TransUnion.

“At this time, we believe the insurance industry is seeing more ‘soft fraud’ because some consumers may be representing their policies incorrectly in an effort to save money, especially in a high inflation environment that places more pressure on their wallets.”

At the same time, the TransUnion report explained that industries experiencing stabilization of fraud instances have reached these results by identifying more legitimate transactions and customers to allow them to pass with less friction.

“Strong fraud and authentication practices decrease false positives and focus fraud-fighting resources on the minority of interactions that warrant scrutiny,” says Sean Donnelly, senior vice president, go-to-market global fraud solutions at TransUnion.

“By reducing the pool of manual reviews and customer interrogations, organizations can dramatically reduce costs, increase revenue, and improve the overall customer experience.”

Mobile device biometrics and KYC providers have been signing up insurers to streamline the ID verification process for insurance services, and the sector was identified as a growth area for biometrics in a recent market forecast.

Public health insurance schemes also seem to be a growing use case for biometrics, as Pakistan’s identity authority, the National Database Registration Authority (NADRA), extended its ID-linked health insurance scheme to the Punjab state in June. More recently, The Gambia launched a new biometric Civil Registry and Vital Statistics (CRVS) database and related health insurance scheme.

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