The rate of suspected global digital fraud attempts in the insurance industry has experienced the greatest rise on a year-over-year basis, increasing 159% between Q2 2021 and Q2 2022, according to a report by TransUnion.
TransUnion examined intelligence from billions of transactions and more than 40,000 websites and apps contained in the TransUnion identity proofing suite.
The research showed that even though there was a global decline of 14% of suspected digital fraud attempts across industries, the insurance and logistics industries witnessed the biggest increase.
First-party application fraud in the insurance industry was at the top insurance-focused fraud activity recorded.
This type of fraud involves fraudulent applications containing intentionally inaccurate or manipulated information provided by the policyholder with the intention of receiving certification, lower rates or better terms for a policy/contract.
The report also said that other industries witnessing the largest declines in the rate of suspected digital fraudulent activity in the forecast period included gaming, travel and leisure, and retail.
Shai Cohen, senior vice president of global fraud solutions at TransUnion, said: “We have observed interesting trends in the first half of 2022 with suspected fraudulent activity in the insurance industry continuing to be elevated during the first six months of the year.
“In recent years, we’ve seen fraudsters shift their industry focus each quarter. At this time, we believe the insurance industry is seeing more ‘soft fraud’ because some consumers may be representing their policies incorrectly in an effort to save money, especially in a high inflation environment that places more pressure on their wallets.”
This report shows how exposed insurers, and therefore reinsurers, are to fraud and how this issue could become another source of potential claims inflation.