Life Insurance Industry: Is your Data Deceitful?
With the rise of InsurTech, insurance companies have been launched into a race to incorporate technology into their strategies and services to avoid being left behind by their competitors. InsureTech has produced – among other things – the opportunity to collate vast quantities of data, opening up new revenue streams and offering access to many more potential clients.
However, as legitimate technology start-ups have disrupted the insurance and financial markets, so less discerning companies have found ways to take advantage of this race for technological advancement – making money out of business clients in fraudulent ways.
Life insurance companies rely heavily on having access to vast quantities of data. This information can be gathered in numerous ways – but the rise of fraudulent data (including fraudulent data that has been purchased honestly) is putting a strain on many otherwise healthy companies.
In fact, statistics suggest that up to 50% of the contact details held within a life insurance company’s Customer Relationship Management (CRM) database will be uncontactable. This is costing the industry up to 75 million pounds per year.[i]
Therefore, questions about the accuracy and reliability of customer data is not simply academic. It is highly significant and could make or break a life insurance company.
What’s the problem?
There are a number of different issues with data that a company holds in its CRM system.
· Fraudulent Lead Generation - Fraudulent bots are now commonplace, meaning that clicks and enquiries are no longer guaranteed to be genuine leads. In fact, data suggests that $1 of every $3 paid for online advertising is wasted due to fraudulent information.[ii] When a company is spending money to generate contact details for people who may have an interest in the company – and then spending additional money on marketing to those individuals, it is vital that those leads are “real” people and not just fraudulent data that will never translate into any human interest.
· Leads being sold to multiple clients - It is difficult to know whether information has been acquired legitimately, or whether it has been recycled from elsewhere on the internet. It is also possible that client lists sold to one company will later be sold on to other companies elsewhere. This leads to competition which – especially when the leads have been paid for – can be a waste of time and money. In addition, it can have an impact on the reputation of a business, where prospective clients are indignant about receiving multiple calls from numerous different companies.
· Is your own data safe? Even the data that is within a company’s own system, that is accurate and reliable can be at risk of being poached and sold on – a GDPR disaster for the company as well as for the clients that have put their trust in the security of the organisation.
Responding with RegTech
To overcome these issues, companies need to seriously consider how they can develop and incorporate RegTech into their systems.
Firstly, gathering data in line with legislation and keeping data safe, in order to comply with GDPR is vital – for a company’s reputation and for the safety of their clients, as well as to avoid large financial penalties. As insurance companies collect data from more and more sources, including the Internet of Things, keeping data secure will become an increasingly challenging issue. Being proactive in the protection of it will be vital. There are many RegTech companies that can help to ensure compliance with data protection requirements.
When it comes to finding genuine data and leads, RegTech can help a company to guarantee that more of the data that they store is accurate and reliable. There are RegTech companies that can combat fraudulent lead generation bots by validating new leads before they are added to the CRM database.
When companies join the technology race, they must ensure that the advancement of their security matches the advancement of their technology; for the sake of financial efficiency as well as keeping their reputation – and their client’s data – safe and secure.
[i] http://www.covermagazine.co.uk. 2019. How AI will change life insurance data fraud. [ONLINE] Available at: https://www.covermagazine.co.uk/cover/feature/3078483/how-ai-will-change-life-insurance-data-fraud. [Accessed 21 August 2019].
[ii] Serenity Gibbons. 2019. Forget Fake News -- It's Fake Traffic You Need to Worry About. [ONLINE] Available at: https://www.entrepreneur.com/article/331055. [Accessed 21 August 2019].