How KYC can Prevent Fraud in Insurance Industry

13 Apr 2020

Insurance companies belong to that part of industries that have to bear a heavy loss due to daily-day frauds. Sometimes, these frauds are ignored because they don’t cause that much harm, but when combined together, the companies realized that they cause more harm.

Know your customer (KYC) is the complete process of verifying the customer’s identity, background checking to know if they have been involved in any kind of fraudulent or money-laundering activity before. Also, it verifies the document submitted by the customer that they are real and not forged.

These frauds occur because the companies neglect the need for KYC compliance, giving a room to fraudsters to conduct their illegal activities. Every year insurance companies lose about $30 billion on average. Mostly two types of frauds occur in these companies.

1. Fronting where the fraudsters take insurance policies on behalf of some other person (i.e. by stealing their identity)
2. Another one is money laundering where the launderers submit a huge amount of money to get premium life insurance policies. But after some time, they terminate it gaining a good amount of money laundered.

In both cases, the insurance company suffers not only because of loss but due to money laundering it can be exposed to the regulatory watchdogs. By taking KYC services, the organization can prevent both these frauds as with the identity verification in real-time, the fraudsters can be caught red-handed and with KYC and AML screening the money launderers or financial criminals can be prevented from taking out insurance policies.

Insurance fraud is a stark reality and many people who commit such frauds do not realise that their actions result in higher premium rates that have to be paid by other people. Hence, a robust platform is needed to be placed in every Insurance organization to tackle this.

Digital KYC solution implements advanced machine learning and AI systems to catch documentation fraud, identity theft and offers liveness detection. It offers a hybrid solution that includes a backup of human intelligence along with the AI that verifies the results from the AI for false positives. This lends more accuracy to the entire process and all this is done in seconds as well.

Accura Scan, a pioneer in scanning technology is a perfect solution for the Onboarding and KYC of the new customers. At Accura Techno labs, it is our mission to replace the manual KYC onboarding. You can check out more information about us here- https://accurascan.com/download