Keep your digital business safe from Insurance Fraud with XTN Cognitive Security®:
In recent years, the insurance market has embraced a strategy focused on digitalization as a way to deliver more direct, accessible, and customer-centric services. The goal is to bridge the gap between providers and policyholders by streamlining processes and enhancing the user experience. But as is often the case, digitalization also opens the door to malicious actors. Online fraud is on the rise in this space too, ranging from the manipulation of personal data to highly structured, organized scams. The consequences for insurers are serious: unexpected costs, reputational damage, and loss of customer trust. Fully protecting digital channels is no longer just a best practice. It’s a strategic decision for the insurance market.
The insurance frauds addressed by XTN fall into two main categories:
An individual with fraudulent intent can manipulate various touchpoints along the insurance journey to their advantage.
Quote Request and Purchase
During the online quote phase, the fraudster enters false information to obtain a more favorable insurance premium. For example, they may alter their age or profession, provide a fake residence, omit previous claims, or register the vehicle under a relative with a better risk rating. If these anomalies go undetected by the insurer, the fraudster will successfully purchase the policy.
Claim Submission
The fraudster submits false or inflated claims through their own account, often accompanied by manipulated documents to receive undeserved reimbursements. Thanks to the systems and processes insurers have implemented in recent years, this type of fraud has become increasingly difficult to carry out.
What’s the fraudster’s gain?
They pay less for the insurance policy, fully aware (or possibly unaware) that if a claim is made, the insurer may refuse to cover the damage. These frauds often involve higher risks than the potential benefits. Saving on the premium may seem advantageous, but in the event of an accident, the risk of being left without coverage is significant.
What is the impact on the insurer’s business?
These frauds cause to insurance companies a direct loss of revenue, due to premiums that were never rightfully collected. They also lead to a significant increase in operational costs, as thorough investigations into suspicious documents must be carried out following reports or claims. Additionally, insurers face disputes, legal expenses, and costs for expert evaluations. Every fraud attempt, even if unsuccessful, consumes valuable time, human resources, and analytical tools.
Criminal organizations operate by impersonating insurance intermediaries (ghostbroking) or by manipulating legitimate accounts of online insurance customers. In this context, the main touchpoints exploited are the quote phase and the customer accounts.
Ghostbroking
Ghostbroking occurs when a fraudster poses as an insurance intermediary or a legitimate agency without the proper qualifications or authorizations. Using carefully crafted digital channels, such as fake websites, they deceive customers with attractive offers and promises of discounted policies.
The fraudster initiates the scam by manipulating data during the quote request, offering a policy with appealing terms. To carry this out, they may have previously tampered with other legitimate accounts, taking over real policies to alter them, or created new ones using false information.
Policies sold through ghostbroking fall into two main types:
Non-existent policies: the sold policy does not actually exist. The customer pays the premium and receives a seemingly legitimate document but only discovers the fraud when filing a claim, realizing they have no coverage. Fake brokers often rely on quote services provided by insurers to support their activity, obtaining documentation that closely resembles the original. This makes their offers appear more credible to potential victims.
Real but “tampered” policies: the fake intermediary uses the customer’s authentic data, often including identity documents, to issue a valid policy from an online insurer. However, some parameters are falsified to obtain a lower insurance premium. The unaware customer pays more than they should, while the fraudster pockets the difference. The issue arises when a claim is made and the customer finds out that the policy coverage (for example, limits, deductibles, etc.) is different from what they believed they purchased.
Manipulation of legitimate accounts
In this scenario, the criminal organization targets real customer accounts, carrying out an Account Takeover with multiple objectives. They may change bank details to intercept reimbursements for genuine claims, redirecting payments to their own account. Alternatively, they open false claims on the stolen account, providing their own payment information to collect fraudulent compensation, hoping the insurer approves without detecting the fraud. This type of attack mainly affects inactive or dormant accounts, which are less monitored by the user and therefore more vulnerable.
What’s the fraudster’s gain?
The advantage is economic and targets people who, chasing very low insurance premiums, trust unverified insurance websites or brokers.
What is the impact on the insurer’s business?
In the case of ghostbroking, the insurer suffers a direct loss of business, and the brand risks being associated with fraud, causing damage to reputation and customer trust. Fake brokers often support their activity by using quote services provided by insurers, obtaining documentation that closely resembles the original. This activity also causes significant costs that do not translate into actual policies. Regarding Account Takeover (ATO), the main risks are direct financial loss due to fraudulent claims payments and reputational damage related to the failure to secure legitimate user accounts.
At XTN, we get it. Insurance leaders are under pressure to deliver seamless digital experiences while fighting smarter, more frequent fraud. Opening your services to genuine customers shouldn’t mean opening the door to scammers. Balancing security and usability is tough, but it’s exactly the challenge we’re here to help you solve.
Fighting insurance fraud requires a proactive, real-time approach that goes beyond simple document verification. It takes the ability to detect unusual signals and analyze and correlate users’ digital behavior. This is where the XTN platform comes into play, designed to detect manipulation attempts before they turn into full-scale fraud.
The XTN Cognitive Security Platform® provides a robust solution to detect and prevent fraudulent activities in the insurance sector thanks to a multilayered analytical approach, focusing on the following areas of analysis within legitimate insurance websites or quote aggregator platforms:
Behavioral analysis during the quote phase
The platform monitors how users interact with the quote form, detecting suspicious behaviors such as excessive copy-pasting or repeated data modifications. These signals, combined with geolocation and device environment information, allow the platform to intercept manipulation attempts before a policy is even requested.
Consistency checks between submitted data and device fingerprint
We cross-check the user’s input (such as age, phone number, email, and address) with the device profile and request history to identify inconsistencies, recycled digital identities, and suspicious patterns. This helps block recurring fraudulent behaviors, even when carried out by different actors using shared elements.
Detection of anomalous patterns and real-time blocking
Through behavioral analytics, we identify suspicious patterns such as multiple requests from the same device, abnormally low premiums, or actors behaving like ghostbrokers. In such cases, the platform can intervene in real time to prevent the issuance of a policy or stop a fraudulent intermediary from operating unnoticed.
Account protection
We leverage behavioral biometrics to detect Account Takeover attempts, identifying unauthorized access to policyholders’ accounts and preventing illicit changes or identity theft.
Watchlists
We maintain updated lists of Indicators of Compromise (IoCs) linked to known fraudulent activities, helping insurers make informed decisions before approving a policy.
Consequences of Insurance Fraud can impact a digital business by:
Have any question? We’d love to hear from you.
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XTN Cognitive Security’s “Information Security Management System” is ISO/IEC 27001:2022
XTN Cognitive Security's information security management system is ISO/IEC 27001:2013
