Insurance companies are the supporting hands for businesses when they face financial downfalls. They help companies revive themselves from scratch and ensure faster growth. However, in this process, firms undergo numerous fraud risks. Investment scams, the flow of illicit funds, false insurance claims, and many others are exposing these companies` strict regulatory supervision.
While the financial loss amounts to $40 billion per annum to fraud, insurance firms require more efficient solutions for their prevention. While they move their operations digitally to better assist customers, these companies must integrate efficient online global ID verification services. This prevents fraud risks and provides clients with more opportunities to secure their financial stability. This blog sheds light on how ID verification services counter fraud in insurance firms.
Shedding Light on Diverse Identity Theft and Other Fraud Risks
Insurance firms will mark new heights as PRNewswire estimates it to reach $8,398.11 billion by 2026. They assist businesses in various ways, from securing their financial standing and serving as a backup in case of loss to helping them generate more revenue. However, simultaneously they are losing millions and their reputation for deficient ID verification checks. Criminals are sophisticated enough to carry out malicious activities without the companies recognizing them.
Fraudsters deploy several schemes to make their financial need look believable. Their action plan includes staged accidents, identity theft, workers` compensation fraud, fake business loss, agent premium diversion, and disaster relief falsification. The shift of insurance companies to digital operations is further exacerbating their exposure to criminal intentions.
False Insurance Claims by Creating Fake Incidents
Fraudsters apply for false claim returns by hiding incidents. The most common in this case is creating a fake automotive accident. Criminals stage this misfortune by showing fake injuries and visiting healthcare centers for treatment. Upon arrival, they obtain fake bills and claim false insurance. This helps them bypass identity verification services. Ultimately, criminals flee with car damage, medical payments, and other compensations.
Fraudsters also use fake scenarios to claim workers` compensation and also funds for disaster relief. By committing synthetic identity fraud, criminals easily avail false returns. Moreover, the lack of adequate ID verification checks leaves enough room for them to exploit insurance companies.
Insurance Fraud and Identity Verification Services’ Roles in its Deterrence
Insurance companies need to carry out ID verification to deter fraud risks more effectively and ensure they deal with legitimate customers and stakeholders. Criminals often conceal their sources of funds to pay premiums; in return, they get clean money. Therefore, insurance companies should prioritize building biometric authentication of IDs for validating customers in real time.
AI-powered ID verification services uncover and discourage fraud attempts by providing more security to insurance companies. These solutions provide the following user-friendly identification steps to mitigate fraudulent digital onboarding:
The end-users visit the insurer’s website and opt for registration for account creation.
In this process, customers undergo validation of identities, for which the system asks them to provide Personally Identifiable Information (PII). This includes full name, social security number, registration details, driver`s license, and passport.
Along with ID verification information, the system asks individuals to upload documents and a real-time selfie to validate facial features and confirming identities. Similarly, for consent authentication, the end-users provide on-time recorded video.
The identity verification services then cross-check these details within global registers and databases to ensure the customers do not hold a previous criminal record.
Insurance companies can avail of several benefits by integrating AI-powered ID verification services. This will automate their claim allocation and risk management process. In return, insurance agents can assure customers that there will be no compromises on their security, returns, and privacy. This will not only increase client retention but also increase revenue generation for these companies. Therefore, insurance companies should see incorporating identity authentication solutions as a topmost priority to build fraud-proof digital systems.