Synectics Solutions Ltd has identified fraudulent behaviour prevalent in the banking sector, which it anticipates will impact insurers in 2016.
Synectics Solutions provides counter fraud services, relied upon by Global Top 50 organisations, to the finance and insurance industries; through its syndicated enterprise fraud prevention and detection solutions: SIRA and Orion. To support clients in the development of their 2016/17 counter fraud strategies, the company has interrogated and analysed the National SIRA database, comprising of over163 million insurance and financial services fraud records, to review 2015 fraud trends and identify emerging fraud risks.
Whilst the company reports a 31% decrease in the overall rate of insurance fraud in 2015; the percentage of fraud attributable to policy inception has seen an increase of 14% compared to 2014. Many insurers are placing increased emphasis on screening at quote and application stage which is helping to diminish the risks presented by ghost brokers and reduce the fraud claims risk presented by dishonest applicants, across their business.
Synectics warns that with this success, a heightened challenge emerges in the form of identity fraud. As the level of publically available, and fraudulently harvested data increases, so have instances of identity fraud. Financial sector analysis of the National SIRA database revealed applications for Current Accounts and Credit Cards were heavily targeted by identity fraudsters in 2015, reporting a 57% increase in identity fraud overall compared to the previous year. There is a high risk that this type of fraud will increase in prominence in the insurance sector in 2016.
Fraudsters seeking to incept insurance policies for the purposes of defrauding insurers will increasingly use false or stolen identities within the application process, in order to circumvent fraud prevention controls. Recommendations from the recent Insurance Fraud Taskforce report to increase due diligence around identity verification supports the counter fraud community concerns in this respect.
Matt Stanton, Head of Product Management at Synectics Solutions commented: “The wider financial services industry is a good source of early indication on the changing tactics of fraudsters, from which Insurers can benefit. Fraudsters are not sector specific or business line specific and they will always look to identify, exploit and replicate any areas of weakness across their target organisations. The organised fraud community is becoming increasingly sophisticated in its use of technology and data, evidenced by the growing breadth and frequency of cyber risks. Insurers recognise that as they block one route of access, the fraudsters set about identifying and taking another. In the immediate term, increased due diligence around identity verification is therefore paramount. Synectics delivers counter fraud advice and services to enterprise level organisations spanning the entire financial services industry, and is ideally placed to bring an informed, current and cohesive view of fraudster behaviours to counter fraud strategies.”