Mandatory use of social security numbers could be the way to authenticate new customers and limit fraud in the insurance industry. And why don’t governments issue validated unique email addresses, based on social security numbers, to citizens?
Validation of personal data
Most insurance companies have to rely on their customers’ honesty and accuracy when they provide a name and address for a new insurance policy. Typo’s occur, especially when customers sign up for policies through websites or by email, but that is obviously not the only issue. Even when the applicant means no harm, people are often inconsistent in the way they introduce themselves.
To use my own name as an example, I am Albert Wienen but I am also A. Wienen. Software can verify whether I am the same person because both names have the same address and date of birth. But what if I get married and add my wife’s name to mine? Or if I change my name to hers? These are actual options in the Netherlands, as well as in other countries. It would make it very easy for me to sign up for new insurance policies even after I have been charged for committing fraud. And a new email address is easily acquired. Formal ID documents such as driving licenses and passports can provide extra validation of personal data, but are not fool proof when chasing fraudulent claims. Those documents can be faked, especially when digital copies are the only ones customers have to provide.
Digital ID as a solution
This is what I propose. Most European countries issued unique identification numbers to their citizens, for tax and social security purposes. Those numbers are often attached to a digital ID, such as DigiD in the Netherlands, BankID in Sweden and EstID in Estonia. The digital ID’s also work with validated email addresses. Use of such digital ID’s should become mandatory when consumers apply for an insurance policy. The Swedish financial industry already operates like this. The result is that fraudsters can be identified more effectively in the underwriting process. Also, fraudulent insurance claims can always be traced to a real person. Furthermore, it is much, much harder for an individual to use a fake identity when applying for a policy or submitting a claim, because the fraudster would have to fake his or her BankID.
The renewed European privacy laws may make it hard to realize this across the entire EU on the short-term. However, our industry and its branch organizations could lobby for a first step: nationally validated email addresses for each citizen, attached to validated personal data and based on social security numbers. This would limit fraud at underwriting and reduce the number of untraceable unjust claims. It would save the branch a pretty sum.