LIMRA: 40% Of Financial Services Firms See Increased Fraud

While Americans are worried and distracted by the COVID-19 pandemic, criminals are stepping up their cyberattacks on individuals and businesses, according to the Federal Bureau of Investigation’s April 6 advisory.

Late last month, LIMRA surveyed financial services firms to determine whether they have detected increased levels of criminal activity. The study finds 4 in 10 companies report an uptick in malicious emails and account takeover attempts over the past 30 days.

The good news is 9 in 10 companies anticipated increased fraudulent activity as a result of the crisis and have taken steps to educate their call center and back-office employees on potential red flags. Seven in 10 companies have engaged their advisors and field staff about what to look for to identify potential scams and criminal activity.

Current circumstances, however, have introduced new risks for financial services companies. Two-thirds of companies believe the shift to remote working and other changes have increased their exposure to fraudulent activity.

Many companies have taken steps to make it easier for their customers to manage their financial matters during this unprecedented time. Almost half of the companies have relaxed controls or procedures to help expedite the processing of certain fi¬nancial transactions to help their customers who may be negatively affected by the economic fallout from pandemic.

Three in 10 have modi¬fied controls or procedures to take certain transactional requests over the phone, which was not an option previously. While these measures are designed to ease their customers’ stress, they do open up more risk of fraud to the firms.

Account takeover and other fraudulent activity in life insurance, annuity and retirement plan accounts have been on the rise over the last several years. LL Global, the parent company for LIMRA, LOMA and Secure Retirement Institute, launched FraudShare six months ago to help companies better detect and prevent account takeover attacks.

This industry-standard platform provides participating companies:

• Incident and threat indicator data, which allows them to detect and prevent increasingly sophisticated account takeover attacks;
• Industry-level reporting on account takeover attacks to enable them to compare their own account takeover activity with broader industry trends; and
• Access to a community of risk management professionals who share their experience and best practices for defending their companies against fraudulent activity.

In the six months since its inception, 29 companies have joined FraudShare, representing 61% of in-force life insurance premium, 40% of deferred annuity assets, and 20% of defined contribution plan assets. More than 30 additional companies are in various stages of reviewing the platform or onboarding.