How Synthetic Identities Are Impacting the Insurance Industry
Synthetic identity theft involves creating a new identity from pieces of real and false information. Fraudsters often use real Social Security members (SSNs) combined with fake names and addresses to create these “synthetic” identities. These fraudulent profiles can be used to open credit card accounts, apply for loans, or even take out insurance policies. The challenge for insurance companies is that these synthetic identities often go undetected until it’s too late – by which time the fraudster has already taken out the policy or service using the stolen identity.
The best way for insurance companies to combat synthetic identities is by implementing an enterprise-wide digital strategy that validates customer data at the point of collection in real time. This could include requiring customers to provide additional forms of identification and validation of signatures, personal identifiable information and documentation of records when applying for coverage. Additionally, insurers should monitor accounts regularly for suspicious activity and use entity resolutions and artificial intelligence and machine learning technology to identify patterns that may indicate fraud. In addition to utilizing advanced analytic and fraud detection solutions, companies should focus on training employees on how to spot signs of potential identity fraud and what steps they should take if they suspect fraud in occurring on a policy, claims, or account.
Synthetic identity fraud is becoming increasingly common in the insurance industry and can be difficult to detect without the right technology in place. Fortunately, there are steps insurers can take to protect their business, customers, and insureds from this type of fraud – such as using advanced entity resolution technology, network generation and perpetual customer monitoring for suspicious activity – to ensure that only legitimate customers area able to access their policies, accounts, and services. By taking proactive steps now, insurance companies can reduce their risk of falling victim to synthetic identity fraud.