GAP IN IDENTITY FRAUD INSURANCE MARKET NEEDS TO BE FILLED WITH ROBUST AND ETHICAL PRODUCTS

The increasing levels and awareness of identity fraud, consumer concerns over insurance product mis-selling and calls for more help for victims, highlight the need for identity fraud insurance product providers to focus on robust and ethical cover if the market is to grow according to Arc Legal Assistance (Arc Legal).

A recent survey of over 2,000 adults in the UK commissioned by Arc Legal and conducted by YouGov found high levels of awareness of identity fraud. 74% of respondents said they were either fairly or very aware of identity fraud. Concerns about becoming a victim of identity fraud were also high with a total of 78% saying they were either fairly or very concerned.

These concerns appear to reflect the growth in this kind of fraud. Figures from the UK’s Fraud Prevention Service, CIFAS, Fraudscape research show identity related fraud increased in 2012 by over 9% compared to 2011 and represented almost 50% of all frauds recorded by its members. By far the largest increase was in Loan Fraud – where a loan is taken out in a fraudulent name – which increased by over 87% compared to 2011.

Richard Finan, Director of Arc Legal, said: “The CIFAS report shows an overall 5% increase in all frauds recorded in 2012 and this was driven exclusively by identity related crimes. This fact, together with the publicity given to recent product mis-selling, and general low levels of awareness of insurance products, creates a mix of issues that insurance providers need to address to ensure cover is relevant, robust and accessible to meet the evolving needs of consumers.”

Respondents to the Arc Legal survey gave a clear message about the need for information on identity fraud, with 84% agreeing there should be more information available about identity fraud and how to avoid it. Similar numbers, (80%) wanted to see more being done to help victims of identity fraud.

Arc Legal fully supports any move to increase the support available to victims. However, it believes more needs to be done to ensure consumers are aware that insurance protection is available. While nearly a quarter (24%) of respondents indicated they would be likely to buy an insurance product that pays for any expenses, losses, and solicitors fees resulting from being a victim of identity fraud, if it was available at an acceptable price, only 23% said they were aware of such an insurance product.

Finan continued: “Our own survey shows that consumers want to see more done to tackle the issue but insurance to address the impact of this kind of fraud is not well known about. This is a worrying matter especially as the average cost to each victim is in excess of £1,190.We have our own initiatives including sales training on product benefits for our distribution partners, to try and increase awareness but more can be done to ensure consumers are aware of the protection available addressing the actual needs of victims of identity fraud.”