Solution Brief PREVENTING INSURANCE FRAUD

Transcription

1 PREVENTING INSURANCE FRAUD

2 Stop Fraudsters Before They Infiltrate Your Insurance Operations Resolving fraud scams after the fact is expensive and disruptive. But now insurers can leverage simple, cost-effective tools that flag fraudulent activity in real-time...and enable you to stop fraud at the door, before it wreaks havoc with your e-commerce, underwriting and claims operations. Pro-active Prevention: Easier, Faster and Significantly Lower Cost. As insurers pursue e-commerce, they re finding that many of the tools that worked well at catching fraudulent activity in the traditional, paper-based world can t keep pace with the real-time demands of online transactions and card-notpresent (CNP) payments. Fortunately, Kount s fraud prevention tools developed to enable e-commerce merchants to combat card-not-present fraud provide powerful, real-time capabilities that are extremely well-suited to stopping insurance fraud. What s more, these tools do not involve expensive IT integration projects or disruptive changes to back-end processes. Instead, they operate invisibly and efficiently at the front end during the online quote and buy process to create a fraud firewall that stops fraud before it can get a foothold in your organization. Legitimate transactions and valid applications or requests for quotes approved in about 300 milliseconds Consumer: legitimate transaction or request online or via call center APPROVED Fraudster: illegitimate transaction or request online or via call center Potential fraud identified, illegitimate transactions, applications or requests for quote declined or flagged for review Claims Fraud Payment Fraud Card Testing Account Takeover New Policy Quote Scams Counterfeit Agent Fraud ID Card Scams Refund Fraud Agent Scams DECLINED / REVIEWED

3 You Can t Teach an Old Tool New Tricks. Online fraudsters are finding ways to circumvent traditional, offline tools. ACH and Comprehensive Loss Underwriting Exchange (C.L.U.E.) are valuable tools for underwriting in the offline world. But online fraudsters have identified vulnerabilities in these tools that they are able to exploit with increasing regularity. The most critical is lack of real-time data. This makes ACH and C.L.U.E. susceptible to first time fraud in online transactions. Unfortunately, in today s world, online fraudsters can easily appear to be first time offenders...over and over and over again. They can quickly acquire new identities (new addresses, new proxy servers, new devices, etc.) to go along with stolen credit cards. This allows them to mask their past illegal behavior long enough to complete fraudulent online transactions. Repeatedly. The result? Carriers may not identify fraudulent online transactions until 30 to 90 days after the fact when they receive a chargeback. Case Study #1 A top 5 national insurance provider was in two Excessive Chargeback Programs (two different card brands). Fines and losses were in the millions of dollars per quarter. Within 60 days of implementing Kount, the company had exited the Excessive Chargeback Programs, saving over $900,000.

4 There s More Than One Way to Defraud an Insurance Carrier. Insurance fraud hurts profitability, revenue opportunities and brand perception. Kount Complete stops insurance fraud schemes cold before they have the chance to infiltrate your operations: New Policy Quote Scams. Prospects submit multiple applications for a vehicle insurance quote using multiple addresses, in an attempt to secure the lowest rate. If fraud detection systems are not able to identify this duplication in real time, rating costs increase as fees are paid for unnecessary DMV record requests. Kount combines real-time technologies such as Order Linking, Multi-Layer Device Fingerprinting, Proxy Piercing, and Geo-Location, to instantly flag multiple applications by the same individual, stopping fraud before it starts. ID Card Scams. In order to register a vehicle with DMV, fraudsters use stolen identity and/or payment information to obtain a proof of insurance card. The validity of the insurance is not important: the goal is to be able to register the car. This kind of fraud can take place on an individual level, or sophisticated fraudsters can fraudulently obtain insurance ID cards by the thousands and sell them illegally. Kount s real-time technologies sniff out the stolen identity and/ or credit card and immediately thwart the transaction, preventing the fraudster from getting even a toehold in your operations. Stolen Card Testing. If fraudsters realize your systems are not real-time, you may become a go-to destination for card testing (where fraudsters confirm viability of stolen credit cards). Chargebacks and associated fees can rapidly spiral out of control. But Kount s real-time capabilities are superior to other solutions at spotting card testers and thwarting these types of transactions, eliminating it as a threat to your operations. Refund Scams. Fraudsters use stolen credit cards to purchase an insurance policy, then request a cash refund. By the time the carrier discovers the fraudulent transaction in the form of a chargeback they are out the amount of the (continued on next page)

5 refund, plus any chargeback fees. Kount s advanced technologies and real-time capabilities prevent the fraudulent purchase from being completed in the first place, short-circuiting refund scams before they start. Agent/Broker Scams. In this friendly fraud scheme, agents/brokers accept cash payments from policy holders, then pay for the policies online with their (agent/broker) credit cards in order to earn rewards points. While the policy premium does get paid, the carrier incurs unnecessary credit card transaction fees, which hurts margins. Kount s real-time technologies make it easy to discover these one-card/ multiple-policy-payment transactions and implement rules that automatically disallow them or escalate them for further review. Counterfeit Agents/Brokers. Fraudsters impersonating an agent or broker will set up shop typically in poorer neighborhoods and offer guaranteed insurance at a low price. The fraudsters collect cash payments from unsuspecting applicants, then use stolen credit cards to pay for the policies. The applicants receive policies, but by the time they and the carrier realize they ve both been defrauded, the perpetrator is long gone. Once again, Kount s advanced technologies and real-time capabilities prevent the stolen credit cards from being used in the first place to fraudulently purchase the policies, avoiding chargebacks and heading off all kinds of public relations problems down the road. Claims Fraud. Fraudsters use stolen credit cards or credentials to purchase insurance and then file a false claim. This can take the form of a new account, against which the fraudster makes a false claim. Or the fraudster may steal customer information to take over the account and add new elements, like an additional car, and then file a fraudulent claim for that car. What s more, in states with PIP regulations, carriers are particularly vulnerable to Claims Fraud due to the accelerated payment time frames. In fact, some carriers have chosen to forego services in these territories, limiting growth, market share, and brand presence along with top line revenue. But Kount enables carriers to confidently market in PIP states, secure in the knowledge that policies fraudulently purchased with stolen credit cards can be effectively reduced to zero.

6 As All Carriers Know, an Ounce of Prevention Is Worth...Millions. One top ten carrier found that fraudulent activity was costing them nearly $2 million dollars a month in chargebacks and associated fees. Another top ten carrier found that ID Card Scams just in the state of Michigan alone were racking up chargebacks in excess of $1 million. Both of these companies implemented the Kount Complete solution and in less than 60 days, both had exited their Excessive Chargeback Programs and eliminated their chargeback problems. It was that fast and simple. It s no secret that fraud is a rapidly becoming an issue no carrier serious about e-commerce can afford to ignore. However, a big obstacle to addressing this problem is the enormous cost involved in translating traditional, paper-based processes into computerized, back-end automation capable of identifying fraudulent activity in real-time. Another challenge? Manual reviews by human agents while highly effective are too slow and too costly to conduct for every transaction. Moreover, the question still remains: which transactions should be reviewed by a human agent and which should not? With Kount, these issues are no longer a concern. Even with our real-time capabilities, Kount is remarkably costeffective, allowing you to stop fraud before it starts while avoiding costly and disruptive IT projects. Deployment time is measured in days or weeks...not months or years. In addition, Kount typically reduces manual reviews to about 2% of total transactions, minimizing this significant expense. Or it can be set up to eliminate them entirely. Finally, Kount s robust capabilities are effective at identifying fraudsters and fraudulent behavior even when a credit card transaction is not involved. For example, New Policy Quote Scams can be quickly identified and shut down before they cost your organization money. That s how powerful Kount is. Case Study #2 A top 10 national insurance provider was in an Excessive Chargeback Program, and suffered major losses from Claims Fraud in PIP states, causing the carrier to suspend new policy activity in those states. Within 60 days of implementing Kount, the company had exited the Excessive Chargeback Program and established rules to significantly reduce risk in new account enrollment, allowing them to resume new customer acquisition in PIP states.

7 All Fraud Prevention Systems Are Not Created Equal There are two common approaches to fraud prevention. Neither measures up to Kount. Standalone/ad hoc tools. Fraud prevention vendors employ a single technology (e.g., Device Fingerprinting) and pretend that it is sufficient to prevent fraud. It s not. Workbench solutions. Vendors aggregate technologies from multiple 3rd parties, but processing is only as fast as the slowest provider (i.e., slow), which leads to timeouts and lost revenue. Kount beats fraud and boosts sales, transforming fraud prevention from a cost center to a profit accelerator. Kount is an integrated, all-in-one, SaaS platform that simplifies and speeds insurance fraud detection. Our proprietary technology provides maximum protection for some of the world s best-known brands and largest insurance carriers. Automated transaction screening. The instant a transaction is initiated, Kount technology evaluates hundreds of variables. The data is analyzed by Kount s Artificial Intelligence which processes data at speeds far beyond human capability, exploiting in real-time the network effect of massive amounts of data, and finding the needles in the haystack worthy of further human intervention. The result is the most accurate fraud detection possible...with about 96% of transactions approved, declined or escalated for further review in 300 milliseconds (literally faster than the blink of an eye). Automated review. If a case gets escalated for further review, our Automated Agent software queries 3rd party resources for additional data. Or it can automatically apply additional rules set by you: for example, multiple policies charged to a single credit card automatically get escalated to manual review. All of this occurs within 2-3 seconds and 98% of transactions are typically resolved by this stage. Manual review. Kount significantly reduces reliance on manual reviews, and can eliminate them altogether. But if you choose to implement manual reviews, Kount provides human agents all the data about a transaction on a single screen for rapid, efficient handling. And routing can be optimized for the most appropriate agent. For example, Spanish-language transactions are routed to Spanishspeaking agents. CONSUMER CARRIER Online Payments Applications Request for Quote PC or Mobile Device BANK $ TRANSACTIONS INCLUDE: Payments Logins Free Trials New Accounts Phone Orders Mail Orders Shopping Cart Data Proxy Piercer Mobile Device Signals Multi-Layer Device Fingerprinting Transaction Velocity REAL-TIME ANALYTICS Geolocation Dynamic Monitoring KOUNT Artificial Intelligence KOUNT Transaction Screening KOUNT Auto Review KOUNT Workflow Efficiency Affiliate Fraud Signals Persona Technology Cross- Merchant Linking

8 Data Insights from Kount Can Also Be Used to Enhance Marketing Use data insights from Kount to improve marketing efforts to customers. Kount is unmatched in using real-time data insights to stop fraudsters. Moreover, these data insights can be extremely valuable in helping you Know Your Customer better to achieve better marketing: Prevent fraudster data from polluting overall customer data, so you can make more accurate marketing decisions (e.g., data won t wrongly indicate that your most profitable customers are young white males vs. females in their 40 s). Distinguish whales from the little fish so you can pursue your most lucrative opportunities. Provide a fuller, more robust picture of each customer to enable smarter segmentation, promotional, and analytical efforts. For example, if California e-commerce transactions show a high percentage of consumers using ipads with Spanish as their default language, that data can help you decide whether or not to launch a Spanish-language promotional campaign in that state. In fact, Kount provides over 40 standard dashboards featuring customer data and conversion analytics to help you make better decisions about customer segmentation, product segmentation, market expansion and more. And these dashboard can easily be customized with drag-anddrop ease. Also, you can use Kount to easily generate reports to meet any schedule. So if you re rolling out a new online campaign and want hourly updates to ensure all is going according to plan, you can quickly schedule that. The bottom line? Reduced fraud is just the beginning of the value that Kount delivers. The surprisingly robust data insights it can provide will help you more efficiently identify new customers and new opportunities so you can continue to confidently boost sales...without fear of fraud. Summary: Boost Sales, Beat Fraud. Kount enables insurance carriers to create a fraud firewall that stops e-commerce fraudsters at the door, preventing them from infiltrating your operations. Better yet, Kount does this without expensive IT integration projects or disruptive changes to back-end processes. Instead, Kount operates at the front end of customer engagements transparently and with no impact on e-commerce performance. Why risk millions in chargebacks and fees trying to resolve fraud after the fact? Kount empowers carriers to confidently engage in e-commerce even in PIP states allowing you to boost sales while you slash the costs of fraud. As an added bonus, Kount also enhances your ability to Know Your Customer, providing rich data that helps you make smarter marketing decisions leveraging the data you already possess...at no additional cost. Contact Kount to schedule a live demo and learn how we can help your insurance operations grow sales, reduce fraud losses, and increase profitability with safer e-commerce. SCHEDULE A LIVE DEMO