Fight fraud through ‘Know Your Financial Professional’ standards

Fraud is on the increase and the growing threat of identity theft makes it crucial for financial professionals to be on guard. Taking steps to authenticate who you are communicating with helps ensure that industry organizations, insurance carriers and other partners are not disclosing protected information about financial professionals or customers to fraudsters.

Rapid technological changes have improved the efficiency and client experience in purchasing life insurance, annuities and other insurance products in the last few years. Technology is essential to any business that wants to remain competitive, but technology has opened up new avenues for fraudsters to exploit our industry or gain access to privileged information.

Know Your Customer has long been an industry standard, requiring a certain level of due diligence before conducting insurance business and helping to combat bad behavior such as money laundering, identity theft, account takeovers and other types of fraud. Having a Know Your Financial Professional mindset can also help prevent insurance industry fraud at a macro level.

Understanding the types of fraud that plague our industry will reinforce the necessity of financial professional authentication. Financial professionals working with intermediaries and carriers must embrace responding to a “line of questioning” so these partners can ensure you are who you say you are. Authentication is vital in protecting financial professional and client information.

Here are several scenarios that could take place in the absence of financial professional authentication.

• Your email account could be compromised.
• A fraudster could gain access to your client information, which could lead to an account takeover.
• A fraudster could gain access to a block of your business at a particular carrier.
• Your identity could be stolen.
• Your insurance license or other professional licenses could be compromised.

So, as an industry, what can we do to combat fraud?

BUILD relationships — not only does this help create a meaningful experience, but it will also help you authenticate who is requesting privileged information.

Be aware of suspicious emails, voicemails or text messages seeking information. Most people have a preferred contact method and known contact numbers or email addresses. Use secure, known, verified methods of communication.

Use resources and strategies to prevent and minimize fraud. Attend training on cybersecurity and anti-money laundering topics. Don’t accept account changes - such as a password reset or policy change – via a phone call

Industry regulations, such as HIPAA, protect the end consumer and can help frame your interactions when working with sensitive information. It is essential to keep up to date with changes.

Limit the use of personally identifiable information. Only share information on a need-to-know basis. For example, don’t share PII in email subject lines or send client data via an unsecured email. Work with reputable firms that authenticate your identity and protect your information.

Develop a relationship with the people you do business with. Follow them on LinkedIn or other social media platforms. Learn everything from what is important to them in the sales process and recently placed business successes to more personal details such as their favorite vacation spots and sports teams.

Combating fraud ultimately helps preserve the integrity of the life insurance industry, allowing it to fulfill its primary purpose of providing financial security to individuals and their loved ones in times of need.

Molly Musselman, AIRC, is market conduct specialist at Crump Life Insurance Services. Contact her at [email protected].

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