Is Canada’s insurance industry becoming an online fraud target?
Canada’s insurance industry saw the highest increase in digital fraud attempts—up 125% between Q2 2021 and Q2 2022—of all industries in the country that were screened as part of a quarterly study from credit-reporting firm TransUnion.
The only Canadian industries outside of insurance that saw rising fraud incidents year-over-year in Q2 2022 were online dating communities and forums, for which fraud activity rose 10%, and gambling which saw an 8% rise.
The good news: Canada’s insurers did better than those elsewhere the world. Globally, insurance companies saw a 159% increase in online fraud attempts between Q2 2021 and Q2 2022.
“At this time, we believe the insurance industry is seeing more ‘soft fraud’—meaning when a policyholder misrepresents certain information or circumstances in an effort to lower the policy’s premium,” said Patrick Boudreau, head of identity management and fraud solutions at TransUnion Canada.
“It may be that some consumers are representing their policies incorrectly to try to save money, especially in a high inflation environment that places more pressure on their wallets.”
Most often, said TransUnion, insurers were hit with first-party application fraud, in which applications with intentionally inaccurate or manipulated information was submitted.
“An example of soft fraud in the P&C industry would be rate evasion, which is a form of fraud where the client deliberately misrepresents information at the point of sale for the specific purpose of obtaining a lower insurance rate,” Équité Association told CU in response to a request for comment.
Many other industries, meanwhile, saw declines in what TransUnion called ‘suspected digital fraud attempts,’ with financial services experiencing a 52% drop and retail posting a 31% slide. Fraud activity also lessened in telecommunications (down 13%), travel and leisure (down 6%) and logistics (down 3%).
The study is based on data TransUnion gathers from transactions made on more than 40,000 business websites and apps.
A recent related study of Canadian consumers found 31% of adults said they’d experienced digital fraud attempts, TransUnion said. And 7% said they’d fallen victim to scams such as phishing, identity theft or other frauds.
Feature photo courtesy of iStock.com/Kameleon007
