Organized Crime Drives Increasing Auto Insurance Costs

All over the world, insurance fraud equates to a multi-billion dollar issue. The Guardian reports that in the United Kingdom, “insurance fraud [has] been on the rise since the recession began. Figures to be published by the Association of British Insurers (ABI) are expected to show that these are still on the rise. As it is, the ABI puts the total cost to the industry of undetected general insurance claims fraud at £2bn per year. This adds around £40 a year to the insurance premiums paid by all policyholders.”

Much of this increase is said to be due to the involvement of organized criminals. The most common fraud technique is known as a “crash for cash” scam, in which criminals slam on their brakes in order to cause an accident with the car behind them, leaving the victim’s insurance on the hook for the cost of damages.

One way of minimizing fraud is to stop organized criminals from transacting with a business over the Internet. Online insurance, retail, gaming, and even dating sites can weed out risky accounts based on devices’ reputations using iovation’s device identification service. When PCs, Macs, tablets, or smartphones collude, a pattern can be detected and fraud can be prevented.

By utilizing iovation’s fraud detection service, insurance companies can not only recognize high-risk devices responsible for creating fraudulent online policies, but also avoid paying for frequent “crash for cash” scams and help to reduce the rise in premiums for honest policyholders.

Robert Siciliano, personal security and identity theft expert contributor toiovation, discusses identity theft  in front of the National Speakers Association. (Disclosures)