How to Overcome the Five Most Common Challenges Faced by Insurance Carriers Today

Implementing a robust verification program provides insurers with the confidence to locate, verify and approve more legitimate customers, faster.

The insurance industry has experienced a host of new challenges since the onset of Covid-19, beginning with a rapid influx of digital customers. 83 million Americans signed up for online services that were once carried out in person and after experiencing the increased convenience, 94% said their move digital will be permanent. In parallel, fraud attempts hit record highs and delivered costly consequences. According to Aite Group, losses due to identity theft climbed from $502M in 2019 to $712M in 2020.

With a growing and immediate need for self-service onboarding and faster underwriting, most life insurance carriers are paying close attention to customer experience and the need to detect fraud without introducing unnecessary friction. Further complicating matters, many consumers are wary of handing over their information to companies after years of experiencing or reading about data breaches and personal information misuse by digital platforms.

Having a robust identity verification solution in place will allow carriers to quickly authenticate customers and deliver a seamless, trustworthy and secure onboarding experience. Additionally, identity verification will be instrumental in overcoming the industry’s top challenges:

1. The need for effective self-service onboarding. Carriers today are more likely to prompt consumers to complete the onboarding process online. This has increased the need to verify the identities of consumers as they access online portals and applications or call fulfillment centers for help.

Knowing that 82% of Americans say it’s important that companies effectively and smoothly verify their identities during the account opening experience, a basic digital presence is no longer enough. In fact, 93 million Americans abandoned signing up for a new online account in the last 12 months because the process was too difficult, too time-consuming or did not seem trustworthy. Given consumer sentiment on ease of use for digital onboarding, the pressure is on to create secure self-service experiences with minimal friction.

2. Accelerated underwriting. Due to difficulty in obtaining lab tests during the pandemic, many insurers increased their accelerated underwriting limits to $2M million. Additionally, digitization has opened up opportunities for people who lack the formal identity documentation needed to apply for insurance. In these instances, identity document verification will play a critical role in gathering alternative information, such as digital health data, needed to verify customers and underwrite accelerated cases.

3. Increasing customer experience demands. Removing unnecessary friction during the identity verification process is critical, as evidenced by 93 million Americans who in 2020 abandoned signing up for a new account because the process was too difficult, too time-consuming or did not seem trustworthy. Improving the customer experience while also deterring fraud requires a digital identity verification solution that leverages multiple data sources and does the heavy lifting to ensure a quick, seamless onboarding process.

4. Protecting customer data amid privacy concerns. There’s no doubt that the cash value of life insurance policies gets the attention of fraudsters. These criminals are skilled at gathering consumer data and striking when they have aggregated enough information to successfully impersonate consumers. The risk hasn’t gone unnoticed by consumers, 63% of which are extremely to very concerned that their personal information could be exposed due to a data breach.

Aware of this vulnerability, consumers are increasingly apprehensive about sharing personally identifiable information (PII), pushing carriers to develop the capacity to verify customer identities without collecting excessive data by analyzing readily available but less invasive information, including IP addresses, phone numbers and email addresses.

However, research shows there is still work to be done. Of consumers recently surveyed by Aite Group, 14% said their personal information was used to buy life insurance or annuities without their consent within the last two years and 11% reported that their accounts were accessed without their consent.

5. Rising Gaps in Technology and Infrastructure. Although leading insurers say that balancing fraud prevention with customer friction is a top challenge for deterring fraud, many have been slow to adopt more stringent identity verification technology and processes to reliably authenticate customers. This poses a significant financial risk to cash value accounts, annuities, and 401(k) accounts held by many life insurance companies.

Any movement of money, such as a claims disbursement or investment distribution, comes with a risk of fraudulent activity. A strong authentication tool can help ensure a policyholder is who they claim to be and empower life insurance carriers to close the widening infrastructure gap while deterring fraud throughout the customer lifecycle, from onboarding to underwriting and filing a claim.

Elements of Effective Identity Verification
Today, high-maturity insurance carriers are effectively implementing an identity verification solution that helps them overcome these challenges and deter fraud, build a better customer experience and grow.

To be successful, an identity verification solution must utilize multiple layers of intelligence to securely locate, approve and onboard legitimate customers with low friction, which insurers report as a top best practice. At IDology, our ExpectID platform orchestrates multiple dynamic data sets to verify legitimate customer identities quickly and accurately, so step-up verification methods are only used when necessary. It also gives carriers the ability to view and understand shifts in customer data, rework assumptions and adjust systems to higher levels of sophistication on the fly, without the need for IT, which is critical for keeping pace with rapid shifts in fraud.

Identity verification tools, data, and decisioning must also be fully transparent, which is why ExpectID provides closed-loop data feedback that is critical for explaining decisioning to regulators and customers, further customizing identity verification processes and gaining valuable business insights.

To learn more about how IDology is helping leading insurance carriers win at customer experience and deter fraud, access our industry-leading reporting on the life insurance industry.

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