‘Fraudsters’ Gaining On Insurance Industry, Expert Says
NEW YORK CITY -- The fraudsters are seemingly remaining one step ahead of the good guys, and the financial services industry is perpetually a prime target.
In an effort to forge a coordinated strategy against fraud networks, LIMRA is hosting its first Fraud Symposium today at its annual conference. Paul Henry, client relationship director for LIMRA/LOMA, will present new data on fraud prevention.
For example, fraud costs to consumers from account takeover is estimated at $5 billion.
“One of the things that we’ve learned is the fraud in the insurance space and in the retirement space is either not reported or it’s underreported," Henry explained.
A key piece of the fraud-fighting strategy is a "clearinghouse system" LIMRA/LOMA will establish and maintain for the industry.
"It will be an online service so that companies that subscribe will be able to go to a user portal and be able to generate reports and analyze the data," Henry said.
A big trend fraud fighters are noticing is that fraud efforts are becoming more coordinating, Henry said. Instead of a cyber gang working to infiltrate and steal data, groups are now very specialized and work together on a mass scale.
"Rather than it being a one-off by a single fraudster, we’re seeing syndicates," Henry said. "In our industry, we’ve made it relatively easy for somebody to create an online account. The fraudsters have figured that out. What’s happening is they're using some of our processes against us."
Cyberattacks cost financial-services firms more to address and contain than in any other industry, and the rate of breaches in the industry has tripled over the past five years, according to a February report from Accenture.
Account takeover is the biggest problem currently, Henry said, and damages not only customers, but the company's reputation as well.
Finally, some insurers asked LIMRA/LOMA to study the problem and help create solutions. That work reached pinnacle in September when the organization hosted a "hackathon," during which six companies sent teams.
It is the latest sign that financial services companies have had enough of cyber crime.
"The good news is that companies have figured out that if the fraudsters are sharing information, so should we," Henry said. "What we’re hoping to do with our clearinghouse system is to be gathering place where we can get that information and have better reporting."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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