What Are Data-Based Fraud Protection Systems, And Why Should the Insurance Industry Care?
Today’s digital technology has significantly streamlined many processes in the insurance industry. However, along with the progress, insurers, wholesalers, and managing general agents (MGAs) face many cyber threats and fraud schemes. To combat this issue, many insurance companies are turning to data-based fraud protection systems.
What are data-based fraud protection systems?
Data-based fraud protection systems leverage advanced technologies such as machine learning and big data analytics to detect and prevent fraud. By identifying unusual data patterns and behaviors that may indicate cyber fraud early, insurance companies can take immediate and proactive measures.
Simply put, data-based fraud protection systems provide an additional layer of security, ensuring that personal information remains confidential and secure, building trust with customers, and helping maintain a company’s integrity and reputation.
How do data-based fraud protection systems work?
Data-based fraud protection systems work by collecting data from various sources, such as customer profiles, network logs, user activity records, and external databases, and analyzing it to identify patterns and the possibility of anomalies and flagging suspicious activities so they can be further investigated.
Key components and functionalities of these systems include:
- Algorithms that analyze large data sets to identify potential fraudulent activity while continuously learning and adapting to new fraud tactics
- Behavioral analytics that monitor user behavior to detect deviations from standard patterns
- Real-time monitoring that allows companies to immediately identify and respond to potential fraud
- Multifactor authentication that requires multiple forms of system user verification to help prevent unauthorized access
- Risk factor scoring that assigns scores to specific transactions and activities, flagging those that appear to have high risk and may require further investigation
- Integrating data from various sources, such as user profiles, transaction records, and external databases, to develop a comprehensive view of a potential fraud situation
- Automated alerts and actions that detect suspicious activity and automatically trigger alerts and take predefined actions, such as blocking a transaction or requiring additional user verification
An example of data-based fraud protection in action:
Let’s say an insurance MGA experienced hackers attempting to gain unauthorized access to sensitive customer information. Using a data-based fraud protection system, the agency detected unusual activity patterns, including numerous login attempts from unfamiliar IP addresses and access times that differed from those of normal user behavior. Further analysis of user behavior also revealed that the login attempts were coming from regions where the insurance company had no customers.
By flagging these activities as potential cyber fraud events, the insurance company can respond quickly to the threat by blocking suspicious IP addresses and using other security measures, such as multifactor authentication. As a result, the data-based fraud protection system enables the company to detect and mitigate cyber fraud attempts early – preventing unauthorized access to sensitive customer data.
Takeaway
With the current rise in cyber threats, ensuring the security of sensitive customer data has become paramount. Data-based fraud protection systems allow insurance carriers, wholesalers, and MGAs to fully take advantage of today’s technology while effectively identifying and mitigating cyber fraud, ensuring the security and integrity of customer information.
At Surefyre, we believe the importance of these systems cannot be overstated. With the right solutions, insurance intermediaries can protect their customers while fully utilizing modern digital tools and platforms. One way to do this is to work with a software-as-a-service provider that has earned an SOC 2 Type II compliance certification, protecting sensitive customer data during digital transactions while preventing potential financial losses and maintaining trust with stakeholders.
About Surefyre
Surefyre is a highly configurable insurance automation platform and agency portal focused on digital distribution and automated workflows. Our easy-to-implement process can integrate with almost any platform — from outdated legacy systems to top-of-the-line programs. Our low-code and no-code integration platform makes your life easier by automating the submission, rating, quoting, and binding process for all property and casualty insurance products.
To learn more, contact Blake Wallace, Account Executive, at bwallace@surefyre.co or 239-405-4337.
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