Insurance companies are still suffering from the increasing number of fraudsters

Organizations around the world have made great strides in preventing corruption in recent years. But there is one industry, according to a recent study, that continues to suffer from the proliferation of thin lines, more than any other: insurance.

For the second quarter in a row, the number of suspected digital fraud cases worldwide in the insurance industry increased year-on-year, increasing 159% between the second quarter of 2021 and the second quarter of 2022. This follows a 134% increase between the first quarters of 2021 and 2022, according to TransUnion’s fraud analysis.

Amidst this huge increase, the number of digital fraud attempts worldwide fell by about 14% during the same period, the analysis shows. Industries that have seen significant declines in the number of suspected online frauds include gaming, travel, entertainment, and retail.

There are many reasons why insurance seems to attract more fraudsters. For the most part, TransUnion officials say, insurance companies face what they call “soft fraud” by consumers. This includes fake articles – as opposed to serious, organized online fraud.

Overall, TransUnion said insurance companies are seeing more “soft fraud” because some consumers may be misrepresenting their policies to save money, especially in low-income areas.

“What we’re seeing is people who are creating fraudulent programs with the goal of getting better rates or paying off debt. This could be part of the rising economy, the concern that people’s wallets are a little bit tighter,” said Sean Donnelly, vice president of fraud solutions. worldwide at TransUnion.

‘Soft Fraud’

Donnelly gave an example of “soft fraud” or “first party fraud” such as someone who lives in the city but says their car is parked in a rural area to get lower insurance.

“Some industries – such as gaming, gambling and financial services – may be using proven methods,” Donnelly said. “So they’re reducing false positives and they may be making more progress in terms of fraud prevention and fraud detection.”

In the US, fraud attempts are up about 22%, a rate lower than the global rate but adding up.

“It’s something I found very interesting and did a little research on,” Donnelly said. “And, you know, most people in the US write by hand while in the rest of the world, writing is automatic. That may be the reason for some of this difference.”

The only other industry sector that saw an increase in fraud attempts was logistics, which is dominated by shipping fraud. This is a type of fraud where the buyer falsifies the shipping address or the seller receives payment for the product or service, but does not ship it to the buyer.

TransUnion based its analysis on billions of dollars of intelligence and more than 40,000 websites and applications in its identity verification, risk-based authentication and fraud prevention solutions. The percentage or number of digital fraud attempts and the number of customers rejected or audited due to fraud indicators compared to all transactions that were audited for fraud.

Doug Bailey is a journalist and freelance writer based outside of Boston. He can be reached at [email protected].

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