Have you ever, as a life insurance carrier, agency/agent, brokerage firm/broker, or technology vendor, gone onto Twitter or other social media and searched “life insurance + fraud”? It is amazing how many consumers are out there posting that life insurers have done them wrong or warning other consumers not to purchase a life insurance policy.
The types of tweets that you find on Twitter are a lot like the following:
- Beware!!! #insurance #fraud #investment #scamaware #scam #money #cheat #lifeinsurance #ConsumerNews #consumerrights
- Lic agent will come to your door step when you buy a policy. But when you want to surrender your policy, they disappear. Try to surrender your policy and see how they make you beg for your own money #lic #lifeinsurance #fraud
- Make All Life Insurance ILLEGAL Now! #fraud #lifeinsurance
What these consumers don’t know is how much fraud happens every day in the life insurance industry. They also don’t realize the impact that fraud has had on the life insurance industry. Carriers have been forced to raise premiums and become more vigilant when processing applications and claims—all creating a bad end-user experience. It isn’t the carrier’s fault. Or is it?
Life insurance carriers have reported that fraud has increased over the past year, and they expect that to continue. They are concerned with fraud across the life cycle of a policy, especially as they move to digital channels, and with the things they cannot see, such as cyber fraud. But what have they done to mitigate fraud? They haven’t been investing in necessary tools and technology, and they haven’t put forth the effort to define a management structure.
Most carriers are using basic analytics, rules engines, and human intuition to mitigate fraud, yet there are many different tools available to support fraud detection throughout the life cycle of a policy. Most of the tools being used are built in-house and based on only personal fraud experiences, leaving carriers completely open to newer fraud threats. Carriers need to consider tools that take into account all experiences, and not just their own. They must use tools that help mitigate fraud before it comes to the door and before a certificate is offered. Tools such as those from IDology, Giact, Pindrop, ThreatMetrix, LexisNexis Risk Solutions, Risk Ident, Equifax, TransUnion, and so many more are proven to prevent fraud and reduce operational costs and revenue loss associated with fraud.
Can you imagine a world where life insurers used these types of tools and reaped the benefits of reduced fraud attacks? In this world, carriers wouldn’t lose millions of dollars of revenue every year, and carriers could get back to reducing premiums and paying dividends. Baby steps, but it can happen with a bit of investment in the right tools and management structure, enabling carriers to return to their primary purpose—providing security and paying beneficiaries.
Learn more about the state of life insurance fraud, how carriers are managing fraud, and how carriers are investing in the problem by registering for my webinar on March 12 at 11:00 a.m. Eastern. A full report is also available.