For the second quarter in a row, the insurance industry saw the largest year-over-year growth in digital fraud attempts with an increase of 159% from Q2 2021 to Q2 2022, according to TransUnion’s latest quarterly fraud analysis report. In Q1 2022, the insurance sector saw a 134% growth in digital fraud from Q1 2021. The only other industry that saw an increase in digital fraud from Q2 2021 to Q2 2022 was logistics – a field which is impacted most by shipping fraud – with a 13% jump.
The most common type of insurance fraud, they found, involved first-party application. First-party application fraud occurs when a person submits an application to an insurer containing false or manipulated information in order to receive certification, a lower rate or better terms for a policy.
Despite the jump in fraudulent activity in insurance, TransUnion found that across all industries, global digital fraud actually decreased 14% from Q2 2021 to Q2 2022.
“We have observed interesting trends in the first half of 2022 with suspected fraudulent activity in the insurance industry continuing to be elevated during the first six months of the year,” Shai Cohen, senior vice president of global fraud solutions at TransUnion, said in a release about the Q2 2022 report. “In recent years, we’ve seen fraudsters shift their industry focus each quarter. At this time, we believe the insurance industry is seeing more ‘soft fraud’ because some consumers may be representing their policies incorrectly in an effort to save money, especially in a high inflation environment that places more pressure on their wallets.”
The industries in the United States that saw the largest declines in digital fraud year-over-year were gaming (-65%), gambling (-49%), retail (-32%) and financial services (-28%).
“For industries experiencing stabilization of fraud instances, the focus has been identifying more of the good transactions and customers to allow them to pass with less friction,” Sean Donnelly, senior vice president and go-to-market global fraud solutions at TransUnion said in a press release. “Strong fraud and authentication practices decrease false positives and focus fraud-fighting resources on the minority of interactions that warrant scrutiny. By reducing the pool of manual reviews and customer interrogations, organizations can dramatically reduce costs, increase revenue, and improve the overall customer experience.”