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Fraudsters Eyeing Life Insurance And Retirement Accounts

Technology has opened up so many opportunities to improve how we live, work and communicate. It is hard to imagine going back to a time without mobile devices, social media, online banking or email. But with all of these technological advances we have also opened up greater exposure for criminals to access our personal information, which has resulted in a higher incidence of fraud.

According to LIMRA research, eight in 10 consumers are concerned about becoming a victim of fraud. In fact, this isn’t an unwarranted concern. More than a third (36%) of consumers have been a victim of financial fraud at least once and 64% of these events have occurred within the past five years.

Regular and constant data breaches at private and public institutions alike have made millions if not hundreds of millions of consumers’ personal and public information readily available to anyone interested in impersonating them. As a result of these breaches, criminals have easy access to some amount of everyone’s personal and private data including their names, Social Security numbers, dates of birth, addresses, and even user names and passwords. In addition, criminals can buy information on the dark web, allowing them to steal people’s identities and leverage that information for nefarious purposes.

Criminals also make use of email campaigns that tempt unsuspecting victims to click on malicious links or attachments, providing access to consumers' computers and emails. Once they have access to your computer and email, they can access whatever you have stored there, such as financial statements and email correspondence with your advisors and/or financial institutions. They can even install software to record all the websites accessed, including user names, passwords and security questions.

Until 2017, most financial criminal activity targeted banking institutions and credit cards. But the LIMRA Secure Retirement Institute reported in its analysis of a federal consumer survey that with more than $42 trillion in investible assets in the U.S., criminals have turned their attention to life insurance and retirement accounts, attempting to drain life insurance and retirement savings plans of the assets of unsuspecting consumers.

According to ThreatMetrix, 10 new account takeover attempts occur each second, which is the fastest-growing risk to U.S. financial services companies. Overall, attack rates have grown 81% year over year, and 211% for mobile transactions.

Companies were ill-prepared for the sudden and unexpected attacks launched by criminals who had all the information they needed to impersonate their customers and initiate disbursements. While companies have become wise to these fraudsters’ tactics, LIMRA research shows companies expect the incidence of fraud in life insurance and retirement accounts to grow substantially in the coming years.

This type of fraud not only has a financial impact but also undermines consumers’ trust in our financial institutions. Companies understand they need to work together to fight this scourge on our society.

When we studied this issue, we found that criminals don’t always know which financial institutions hold the accounts associated with the identities they have stolen. Using easy-to-access 800 numbers and financial institutions’ websites, fraudsters often contact companies one by one until they find one that has the accounts of the individual they wish to impersonate. Through this process, however, they leave a footprint of their own — IP addresses, phone numbers, etc. can be tracked and shared to thwart future attempts.

The Neighborhood Watch For Financial Services

LIMRA and LOMA worked with 10 leading insurance companies to create a platform to allow financial institutions to warn each other when a criminal attempts to fraudulently access life insurance and retirement accounts. FraudShare allows participating companies to share the information associated with fraudsters and their attacks to help companies identify when a call, a fax, an online interaction or a requested disbursement was initiated.

The tool is a fraud information clearinghouse and alert system that allows companies to better protect themselves against fraud while providing industry-level reporting of account takeover activity.

We believe our industry is stronger when we work together to protect our customers.

Russ Anderson joined LL Global, the parent company of LIMRA and LOMA, in 2019, and heads its fraud prevention program. Russ may be contacted at [email protected] [email protected].

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