Spotlight: Reinforce customer integrity by stopping fraud earlier in the sales process 

Close to 90% of UK car insurance shoppers source quotes through comparison websites. Digital sales interfaces now represent the initial point of entry in the insurance customer lifecycle, and organised fraudsters have taken notice. 

Is your digital-first experience across comparison websites and other portals inadvertently welcoming increased risks around application fraud and account takeover? 

This article highlights how strengthening fraud defences earlier in the customer journey can help fortify the security of your entire ecosystem and create competitive advantage. 

An Insurance Post survey in conjunction with LexisNexis Risk Solutions was carried out to explore how insurers are approaching the challenge, with findings revealing key trends and steps to consider next. 

Balancing the opportunities and obstacles of digitally driven sales 

Comparison websites are a valuable tool for UK insurance providers to expand market share and meet potential customers on digital channels where they want to shop for a policy. 

Insurers are constantly tested to take full advantage of digital sales opportunities while simultaneously tackling quickly evolving and often AI-enabled fraud typologies.

These portals also feature the perfect combination of limited applicant visibility and digital velocity that expert fraud rings love to exploit. The LexisNexis Risk Solutions Cybercrime Report tracked more than 2,300 bots probing US insurers’ quote portals over a six-month cycle. During this same period, we saw over 12,000 confirmed fraud attempts aimed at insurers and a full half of these attempts got through.

Comparison websites and online sales interfaces are the digital front door into the insurance customer ecosystem and provide anonymity for ghost brokers and organised fraud groups to systematically slip in with devices, emails and logins that look legitimate. 

Numbers estimate that one in every 11 new account creations on digital networks is an attack. Networked fraudsters are using digital entry points such as comparison websites as an opportunity to hide in plain sight amid massive volumes of traffic. 

The challenge compounds as insurers contend with the rise of synthetic and artificial intelligence-generated identities. LexisNexis Risk Solutions research focused on the UK market revealed a staggering 500% increase in high-risk synthetic identities since 2020, highlighting the scale and urgency of the problem. 

This trend is echoed in the recent Insurance Post/LexisNexis Risk Solutions insurance fraud survey, where 47.4% of head of fraud/director-level respondents identified identity fraud as one of the fastest-growing typologies. 

Insurers are constantly tested to take full advantage of digital sales opportunities while simultaneously tackling quickly evolving and often AI-enabled fraud typologies. 

Starting with a more secure customer ecosystem proactively reduces the operations demands and cost burdens of claims remediation and potential losses further downstream.

Turning fraud detection into a valuable differentiator

Escalating insurance fraud leaves both insurers and their customers paying a price. Estimates show fraud adds an average of £50 to £60 to annual motor insurance premiums for all UK drivers, which translates to 15–20% of the average policy costs. 

More than half (55.8%) of the insurers we surveyed report increasing their counter-fraud budget in the past 12 months, with 20% saying their fraud budget increased by 10–25%.

Increased fraud and remediation activities also introduce indirect costs and operations impacts that add friction and delays to the customer experience. Insurers are looking for ways to leverage technology and AI to alleviate the pressures on front-line team members and bottom-line margins.

Preventing more fraud at the point of sale enables insurance firms to protect their entire customer ecosystem from the negative impacts of organised fraud and ghost brokers. 

Starting with a more secure customer ecosystem proactively reduces the operations demands and cost burdens of claims remediation and potential losses further downstream. 

Controlling the cost and productivity impacts of fraud at the front end of the customer lifecycle creates advantage by helping insurers:

• Offer more competitive pricing.
• Reduce friction and streamline experiences for trusted customers.
• Focus internal resources on highest return activities.
• Realise increased operations efficiency and responsiveness.

Taking steps to prevent fraud vulnerabilities upfront can pay valuable and sustainable dividends by enabling insurers to decrease fraud losses and differentiate in a crowded marketplace.

Stopping organised fraud risk by starting with stronger digital perspective

Balancing a digital-first customer experience and a secure customer ecosystem, at the pace of instant, is a difficult equilibrium to achieve. 

Respondents to our survey rate identity fraud (60.4%), opportunistic fraud (47.9%) and professional/organised claims fraud (22.9%) as the most difficult fraud typologies to identify. 

While the challenges mount for insurers, fraudsters – already empowered by readily available AI and technology tools – are leveraging the anonymity and accelerated pace of digital sales to blend in, strike, monetise and quickly scale.

Insurers need to increase risk transparency at the point of sale without negatively affecting customer experience. The answer is found in adding a combination of automated decisioning technology and expanded risk insight. 

Digital-first strategies demand comprehensive and connected digital-risk insight that delivers a more holistic applicant-risk profile across identity, devices, locations, email addresses, behaviour patterns and transaction intelligence. 

Key components to consider when evaluating digital identity risk assessment tools include:

• Is the digital identity intelligence compiled from broad, globally contributed transactions across diverse cross-industry sources?
• Can the tools deliver real-time perspective into a persistent digital identity?
• How frequently is the intelligence updated and refreshed?
• Do the tools provide cross-industry collaboration?

Uncovering and preventing more fraud upfront helped one insurer decrease exposure to third-party liability on fraudulent policies and reduce fraud losses from false claims.

Adding the advantages of comprehensive digital identity insights at the point of sale can enable insurers to detect anomalies that might indicate fraud before the application and policy are finalised. 

In one example, an insurer increased their fraud-detection rate by 60% by augmenting their authentication and risk assessment processes with globally shared digital identity intelligence. 

Uncovering and preventing more fraud upfront helped the insurer decrease exposure to third-party liability on fraudulent policies and reduce fraud losses from false claims.

Reinforcing the integrity of your customer ecosystem by preventing more fraud at the point of sale helps reduce losses tied to organised fraud and ghost brokers so you can strengthen competitive positioning and stay focused on building loyal customer relationships.

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Learn more about how LexisNexis Risk Solutions can help you revolutionise the way you fight fraud.

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