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The area of insurance fraud that companies ignore at their own risk

The area of insurance fraud that companies ignore at their own risk | Insurance Business UK

The area of insurance fraud that companies ignore at their own risk

It is an unfortunate fact but like time, money and land, attention is a finite resource. All too often one area of concern is emphasised to the detriment of another, creating an uneven balance that warps recognition of the broader risk environment. Dr Nikolay Gaubitch (pictured), director of research EMEA at Pindrop, noted how in the six years he has worked with the information security company, he has seen first-hand how neglected voice fraud attacks are as a consideration.

Pindrop, which works with over 60 companies globally including large banks and insurance companies, has analysed over two billion calls to date, including one million fraudulent calls, and actively works to educate consumers on this risk. Discussing the firm’s recent ‘Voice Intelligence Report’, Gaubitch highlighted that while the current fraud rate for insurers is lower than the overall call centre fraud rate, the insurance sector sees increased sums of money and stakes of success associated with this fraud.

Read more: What are the new insurance fraud trends to be aware of?

He and his team spend a lot of time educating potential customers on the problem of fraud in the telephony and IVR (interactive voice response) automated systems space, he said, something that is rife in the finance and insurance sectors. Even though insurance has seen a whopping 248% increase in phone fraud since 2015, he said, everyone seems to remain focused on the online channel without recognising that telephony is actually where a lot of online fraud is facilitated at an earlier stage.

“Within the IVR space, for example, one very interesting and surprising factor was that we could see the fraudsters probing into accounts up to 60 days before an actual fraud attempt happened,” he said. “So, you can see that these fraudsters are patient, and they use the phone to validate data and fish for extra data before the actual fraud attempt is made.”

Gaubitch, whose background is in audio and speech analysis, highlighted how essential the education piece is in increasing awareness and that Pindrop initially received a lot of pushback from businesses ignoring or denying that they have a problem with voice fraud. Admitting you have a problem is the first step to solving it, he said, and the firm has worked hard to broaden their clients’ horizons allowing them to look beyond just online fraud and making them aware of all the solutions available.

“When looking at how to protect yourself, the first part is to really investigate your telephony channel,” he said. “And that’s the automated IVR as well as the agent. That’s the first part and that’s where we can really help. We have the technology to work with customers to first identify and quantify the problem and then sort out how best to tackle it.  

“The other part is to continue educating customers. I think we can never get enough of that. And I feel that data security almost needs to be part of the school curriculum these days because it has to become almost a reflex not to trust what’s going on around us when it comes to data.”

Read more: Aviva reveals the key to fighting insurance fraud

One particular area where Pindrop is seeing huge growth in the sums involved is around life insurance policies, he said, which are being targeted due to their high cash value, which can then be liquidated or used as an investment vehicle. Where before it was common to see fraudsters attempt to pull out a few thousand pounds or so, now this has risen to the hundreds of thousands, and its impact on individuals is devastating.

There is still a strong shame mentality when it comes to fraud, Gaubitch said. But while it’s understandable that no business wants to be in the position of having to instruct their customers to be more careful, it is positive to see the slow but steady normalisation of companies sending out messages warning customers to protect their personal information. Certainly, he has seen there is much more interest in the types of solutions offered by Pindrop, which has the ambition to become the go-to provider of security and identity in voice interactions across the globe.

“So, when it comes to voice fraud, my key message to people is to think twice about who’s calling you,” he said. “If you’re not sure who you’re talking to, then hang up and call them back at the verified number. That’s my number one message to the public. To organisations and businesses, I say, pay attention to fraud in the IVR and the telephony space and there are technical solutions out there that can help - technology and artificial intelligence have moved forward significantly to be able to reduce this problem.”