5 reasons why insurers should adopt digital identity verification

The exponential increase in frauds and cyber-attacks in the insurance sector over the past years has had a tremendous impact. In these cases, given the sensitive nature of the data, the consequences are reflected in various areas: from healthcare to corporate finances and the security of digital identities.

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raud in the insurance industry grew by 134% in 2022 globally (TransUnion), translating to $300 billion in losses. Although the situation is complex and involves various factors, a fundamental element to tackle the threats is an improvement in identity verification. Companies must update their technologies to manage customer identity, emphasizing decentralized management, to stay protected in a context where frauds multiply and affect all types of insurance. 

Frauds and impersonations: crimes affecting all types of insurance 

According to the Coalition Against Insurance Fraud, with extensive studies on fraud in this industry, especially in the United States, between 10% and 20% of claims are fraudulent. The types of insurance most affected by this activity are life insurance, health insurance, auto insurance, and home insurance. 

Identity theft is one of the major problems faced by the sector, as it is the gateway to committing crimes and frauds. Impersonating another person pursues various goals in the insurance industry, mainly: 

• Obtaining fraudulent policies: Fraudsters can use false identities to acquire insurance policies, allowing them to obtain coverage under fictitious names. 
• Filing false claims: By impersonating the identity of a legitimate policyholder, scammers can file false claims. This involves reporting fictitious events, damages, or nonexistent losses to fraudulently obtain financial compensation. 
• Unauthorized access to sensitive data: Criminals may seek to access internal databases of insurance companies to obtain sensitive information, facilitating them to commit other frauds, such as selling stolen data on the black market or conducting more sophisticated attacks. 
• Obtaining coverage for ineligible persons: By using false identities, fraudsters can obtain insurance coverage for individuals who are not actually eligible. This may include coverage for nonexistent risks or the inclusion of individuals who do not meet the criteria set by the insurer. 

Insurers must focus on protecting customer interaction points that are particularly sensitive to fraud, such as login processes and electronic signatures. Phishing scams, exploiting vulnerabilities in systems to obtain confidential data, pose a significant cost for both companies and users. In the insurance sector, economic losses directly impact families’ finances as premiums increase. 

Contact an expert in identity verification and fraud now to avoid economic consequences. 

Strengthening identification processes from various fronts 

Practices of digital identity verification need reinforcement from various angles, with special attention to intelligent document analysis and electronic signatures. Document analysis involves the use of advanced technologies, such as artificial intelligence and machine learning, to examine and validate the authenticity of documents presented during the identity verification process. This method not only streamlines the process but also enhances security by detecting potential irregularities or forged documents. 

Furthermore, the implementation of secure electronic signatures not only simplifies transactions but also provides an additional level of authentication. This is relevant in a context where most interactions occur remotely. 

Insurance companies have an obligation to take proactive measures to ensure that only authorized individuals have access to sensitive information. In this landscape, many companies are relying on decentralization to sustain their identification systems. 

Defending the user and combating money laundering (AML) 

Without losing sight of the user and the defense of their interests, insurers must structure their identity verification systems addressing these reasons: 

1. Efficient application process: Digital identity verification simplifies the insurance application process by eliminating the need for physical documents or in-person procedures. Procedures are strengthened from the outset, facilitating a faster and more efficient process.
2. Regulatory compliance: Compliance with government regulations related to anti-money laundering (AML) and terrorism financing. Ensures insurers comply with identification and verification requirements established by regulatory authorities, which vary in each territory.
3. Information security: A key point of digital identification adapted to the insurance sector is the reduction of the risk of identity theft and the protection of sensitive customer information. The implementation of advanced verification measures contributes not only to protecting customer data but also to building trust in the brand in the long term.
4. Improved customer experience: Streamlining processes results in a faster and more convenient experience for the customer, who appreciates the ease and simplicity in processes, leading to greater satisfaction and loyalty.
5. Reduction of operating costs: The automation of digital identity verification can reduce operating costs associated with manual management and review of documents. More efficient methods contribute to higher profitability for insurers.

Trustcloud platform: experts in identity verification adapted to critical sectors 

The choreographic capabilities of the TrustCloud platform stand out as a robust defense against fraud in the insurance sector. With specialized solutions in identity verification, electronic signatures, and Know Your Customer (KYC) processes, TrustCloud provides a robust environment that allows insurance companies to establish comprehensive strategies to detect fraud attempts before it’s too late. 

The choreography of services ensures a consistent and efficient response in user identification, document authentication, and regulatory compliance. TrustCloud not only strengthens internal processes but also creates a trustworthy environment that actively deters and prevents any fraud attempt, safeguarding the reliability of an industry whose revenues increased by 3% worldwide in the last quarter of 2023, following several quarters of gradual decline. 

Protect your business and increase efficiency with a specially designed transaction strategy.

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