25 Jun 2024in Use cases

How to Set Up World-Class Identity Verification in the Insurance Industry

Henry Patishman

Executive VP, Identity Verification solutions at Regula

The Insurance industry is going digital because more customers prefer to handle everything from their devices. Analysts forecast that by 2027, global IT spending in Insurance will grow by 8.1% annually. This growth, among other things, is driven by solutions for remote onboarding and digital identity verification.

In this article, we will explore why identity verification for Insurance is crucial and what methods it employs.

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Why is automating identity verification in Insurance becoming the new norm?

The primary reason an insurance company needs digital identity verification (IDV) lies in accuracy and convenience in customer data acquisition and management. There are also other considerations that can be roughly divided into two categories:

  • those driven by security considerations;

  • and those derived from user experience expectations.

Security issues are largely influenced by increasingly stringent regulatory requirements. The intention to enhance user experience is dictated by the need to improve conversion rates in online channels. 

Let’s explore the main reasons.

Fraud prevention

Fraud is a significant challenge in the Insurance industry, costing $308.6 billion annually in the U.S. alone. Most commonly, fraudulent activities involve identity theft, false claims, and ghost broking (where fake insurance policies are sold). Such incidents can severely impact an insurer’s financial health and reputation. 

By implementing robust identity verification solutions, insurers can spot and prevent such fraud before it causes any harm. 

First and foremost, insurance identity verification helps ensure that a person is who they claim to be, and that their identity document is real and valid. Through scrutinized checks of an ID, the IDV solution proves the identity or flags any suspicions.  

The same identity-proofing approach helps insurers prevent unauthorized use or manipulation of policies and avoid fraudulent claims.

Building customer trust

Using IDV solutions for customer onboarding and authentication can serve as a trust signal that customers' data is handled responsibly and securely. And it is. Quality IDV solutions are underpinned by advanced encryption and use secure channels to transfer data (if needed). This ensures that personal information is thoroughly protected. 

Furthermore, by verifying identities accurately, insurers can prevent identity theft and unauthorized access to insurance accounts, safeguarding customers' personal and financial information.

Staying compliant with regulatory standards

nsurance companies operate in a heavily regulated environment. For this industry, identity verification is not an option but a necessity to avoid legal issues and maintain credibility. High-quality identity verification helps organizations in many aspects.

First, accurate insurance identity verification allows compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations regardless of the insurer’s market or customer geography. Plus, IDV solutions help meet data protection regulations, such as the GDPR in Europe.

It’s also important that identity verification for the insurance industry facilitates passing audits and inspections. Maintaining audit trails of verification processes allows insurers to demonstrate compliance with regulations and provides a clear record of verification activities, enhancing accountability and trust.

User сonvenience

Modern automated insurance identity verification significantly simplifies customer access to insurance products and can become a competitive differentiator. 

First, IDV solutions enable remote onboarding. Customers can use their own devices and have zero stress about in-person visits, waiting in long queues, and spending too much time on onboarding. The less effort obtaining an insurance policy requires, the higher the chance the customer will complete the journey. 

Second, the whole identity verification process is very quick and easy when facilitated by good technology. Digital IDV solutions provide a user-friendly interface that guides customers through onboarding, which makes the process easy even for elderly or non-tech-savvy people. The ID data is instantly read and captured by technology, so the person doesn’t have to fill in numerous forms manually. This reduces friction and enhances the overall customer experience.

What are the components of identity verification for insurance?

The process of insurance identity verification is pretty much the same as for other highly regulated industries. It should be as comprehensive as possible and should comprise both document and biometric verification to significantly reduce the risk of fraud, including sophisticated types, such as synthetic identities, deepfakes, etc. 

In the ideal scenario, a single-vendor solution covers all the steps of the IDV process to enable a maximally smooth experience.   

There are three major steps in the identity verification process:

ID scanning and document verification

Usually, it all starts with ID scanning. The customer needs to take a picture of their ID using a smartphone or a web camera. The IDV system automatically captures the document's image in real time, instantly recognizes its type, reads the data from all the zones, including MRZs, barcodes, and RFID chips, and extracts the information needed for filling in the forms.

Automated data entry in a mobile app

Automated ID scanning and processing streamlines onboarding and eliminates human-related errors

The next stage is data and document verification. It helps either prove the genuineness of the ID or spot inconsistencies that may indicate fraud. For example, Regula’s IDV solutions perform extensive data cross-checks to ensure that the repeated pieces of information are consistent throughout all the ID zones, e.g., checking if the name and birthdate in the visual zone are the same as in the MRZ or a chip. Otherwise, mismatches in document data may indicate that the document has been tampered with.  

It is also vital to ensure that you are dealing with a real identity document that exists as a physical hardcopy (if it’s not a digital ID, of course). This check employs document liveness verification technology that assesses a document’s dynamic security features, such as holograms. Ensuring that a customer provides a real document, not a screenshot or a picture, helps mitigate the risk of falling victim to fraudsters who try to bypass security measures by providing fake or non-existent identity documents.

Selfie capture & liveness detection

In remote onboarding scenarios, this is known as biometric verification. A selfie is submitted along with the ID to enable face matching (see below) and ensure that the person is the same as in the provided document.

However, it is liveness detection that allows for the most reliable and profound verification of a person’s identity. During this check, the person is required to look into the camera and perform some minor movements, such as blinking, turning their head, zooming in, and so on.

Active authentication with liveness detection

A possible workflow for liveness detection

Such an interaction efficiently prevents fraudulent presentation attacks, namely the use of static face images, printed photos, video replays, video injections, or realistic masks in attempts to impersonate legitimate users. Liveness detection also instantly determines spoofing attacks with live face substitutes while verifying identity through the smartphone camera or desktop device.

Face matching

Face matching involves comparing the selfie submitted by the customer to the photo on their ID document. By cross-referencing facial features, this technology can detect discrepancies and potential identity fraud. This is particularly important in situations where personal information such as name, address, or social security number can be easily obtained by someone who is not authorized to use it.

Face verification example

Face matching technology helps understand if an insurer is dealing with a rightful person

Plus, automated face matching speeds up the verification process, making it quicker and more efficient for both the customer and the insurer.

How Regula can help

Regula provides a complete single-vendor IDV solution that can meet all the requirements of the Insurance industry. 

Regula Document Reader SDK and Regula Face SDK offer a broad range of features to enable the most comprehensive insurance identity verification: 

  • A complete set of authenticity checks for identity documents and biometrics based on powerful facial recognition algorithms and neural networks.

  • Seamless integration into current AML/KYC processes.

  • 100% compliance with privacy, security, and integrity standards.

  • Fully automated flow. 

  • Improved customer onboarding thanks to the user-friendly interface and customization.

  • Fraud detection and prevention functionality. 

  • The most comprehensive document template database in the world with 14,000+ ID samples from 250 countries and territories.

Interested in learning more about how Regula's identity verification solutions can support your insurance business? Book a call with a Regula representative at your convenience.

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