Insurance is built on trust. Your policyholders trust you to protect them, and you trust that your policyholders are accurately representing their exposure and risk.

Historically, the mutual trust of insurance providers and policyholders was assured through personal connection, eye contact or a handshake. As the insurance industry continues to shift toward serving customers online, maintaining that trust requires a proactive and orchestrated approach.

From September 2018 to September 2019, we examined over 10 billion global online transactions we protect, identifying 9.14% as risky in the insurance industry compared to 5.09% of risky transactions across all sectors. The insurance industry has a fraud problem, and the challenges are widespread – but understanding these threats will enhance the trust and protection you provide everyday to your policyholders. Let’s take a look at the five emerging fraud trends that we can expect to see in the insurance industry in 2020:

Insurance fraud trend #1: Policy applications are having an identity crisis

Attempted online first-party application fraud – in which a person falsely applies for an insurance policy – is up 516% among iovation customers from 2015 to 2018. Fraudsters may attempt to apply for coverage using stolen personal information, fictitious details or a mix of the two, creating a synthetic identity. They may also alter and falsify application information to reduce their premiums, such as a rate evasion scheme in which the policyholder misrepresents the number of miles they drive or records a false garaging address.

Stopping fraudulent applications at the onset can save insurance companies money they would otherwise lose to fraud, as well as resources spent on internal investigations to curb fraudulent behavior.

Insurance fraud trend #2: The cost of bad debt continues

When a policy is issued but not funded due to lack of payment from a bad check or stolen credit card, insurance carriers still have to cover liabilities for that initial period of time. Premium write-offs result in free insurance coverage, since carriers cover policies during the premium latency period. According to iovation data, loan default – or a lapse in premium payments on an insurance policy – accounted for 5% of fraud in the insurance industry between September 2017 to September 2018, with the use of false credit cards accounting for an additional 3% of all insurance fraud.

Insurance fraud trend #3: As consumers rapidly migrate to mobile, fraudsters follow

According to iovation data, online insurance providers had 54% of traffic coming from mobile in 2018, with mobile traffic reaching 56.6% during the first half of 2019. Today’s mobile apps are a competitive differentiator for insurance providers, allowing policyholders to view their policy details, review and add coverage, pay premiums, and even file claims from their devices. Yet this shift toward mobile opens up new vulnerabilities for fraud. Fraudsters are increasingly using mobile devices, or emulators that appear to be mobile devices, in their relentless efforts to make criminal tactics appear legitimate. During the first half of 2019, 49% of the risky transactions for insurance carriers came from mobile devices.

Insurance fraud trend #4: Increasing popularity of insurance aggregators

Insurance aggregators provide consumers with a convenient way to shop for competitive insurance rates without having to submit multiple applications. The use of aggregator sites is gaining momentum in the US, while the UK has an established market share with two-thirds of motor insurance coming directly from aggregator sites. This rising trend introduces new challenges to insurers, including reduced data visibility, lack of direct contact with customers and increased risk of rate evasion tactics.

Insurance fraud trend #5: Ghost brokers will try to haunt consumers

Acting as self-appointed intermediaries between insurers and consumers, ghost brokers will either purchase insurance with false details, sell the policies and then cancel them after they’ve been resold, or, they might create false documents that look like they are from a legitimate insurance carrier. In either case, the unsuspecting victims who believe they purchased insurance policies are instead left with useless policies, liability and financial exposure. Online third-party application fraud – in which a person falsely claims to be a broker applying for another person’s insurance policy – is up 139% among iovation customers from 2015 to 2018.


Start the new year with a fresh assessment of how you are protecting the trust between you and your policyholders. In this digital age of insurance, it is imperative that carriers use all available tools to prevent fraud and keep costs down for both themselves and consumers.

To this end, creating a seamless experience for the consumer across all channels is critical for success. Companies with a strong omnichannel strategy have an average customer retention rate of 89%. Providing an omnichannel experience is paramount not only for a smooth customer experience, but also to ensure fraud can be identified when it happens, regardless of when it occurs.

To find out more about the emerging trends in insurance and how to maintain a positive omnichannel consumer experience, download our new white paper, The Evolution of Fraud in the Insurance Industry.

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    Global Data Insurance Aggregators, 2019