How To Stop Cybercriminals From Using Your Identity for Insurance Fraud

When you think of insurance, you probably often think of insurance as a shield against life's unpredictable misfortunes—car accidents, medical emergencies, or home disasters. However, there's a growing threat lurking in the shadows of the internet: cybercriminals using identity theft to commit insurance fraud. These aren't just petty schemes; we're talking about sophisticated operations that can leverage a stolen Social Security number or a breached email account to create fake policies, stage phantom accidents, or even obtain medical care in your name. Understanding how these digital con artists operate is your first line of defense. In this post, I'll expose the tactics cybercriminals employ, from crafting "synthetic identities" to taking over your existing insurance accounts, and reveal the costly impact they have. Here's what you need to know:

Cybercriminals are using a variety of sophisticated methods to commit insurance fraud through identity theft. This type of crime is a significant and growing problem, costing insurers and, by extension, honest policyholders, billions of dollars. Here's a breakdown of how they do it:

Synthetic Identity Fraud. This is one of the fastest-growing types of identity theft. Instead of stealing a complete, real identity, criminals create a "synthetic identity" by combining real and fake information. For example, they might use a real Social Security number (often a child's or an elderly person's) and pair it with a fake name, address, and date of birth.

How it works for insurance fraud: They use this synthetic identity to apply for and obtain an insurance policy. Once the policy is in force, they quickly file a fraudulent claim—for a fake accident, a staged theft, or a nonexistent injury—to collect a payout. Because the identity is a mix of real and fake data, it can be incredibly difficult for insurers to verify and trace the fraud.

Account Takeover. Cybercriminals gain access to a person's existing online insurance account. They can do this through various means:

Phishing: Sending fake emails or texts that appear to be from the insurance company, tricking the victim into giving up their login credentials.

Credential Stuffing: Using lists of usernames and passwords stolen from other data breaches to see if the victim has reused the same credentials for their insurance account.

How it works for insurance fraud: Once they've taken over the account, they can change the contact information (address, phone number, email) so that the victim doesn't receive notifications about the fraudulent activity. They then file false claims under the victim's name, often for staged accidents or fake medical procedures, and have the payout sent to an account they control.

Medical Identity Theft. This type of fraud specifically targets health insurance. It can happen when a person's health insurance information is stolen, often from a data breach at a healthcare provider or a phishing scam.

How it works for insurance fraud: A criminal uses the stolen health insurance information to receive medical treatment, obtain prescription drugs, or even get procedures performed in the victim's name. The insurance company is then billed for services that the victim never received. This can have serious consequences for the victim, who may be left with a large bill, a damaged credit score, and inaccurate medical records that could affect their future care.

Filing Fraudulent Claims on Stolen Policies. This is a more direct form of fraud. A cybercriminal steals a person's personal information—including name, address, Social Security number, and driver's license number—and then uses that information to apply for a new insurance policy.

How it works for insurance fraud: The criminal uses the stolen identity to get a new auto or homeowner's policy. Shortly after, they submit a fraudulent claim, such as reporting a car stolen or a home burglarized, to receive a quick payout. Since the policy was purchased with the victim's information, the fraudulent claim is also filed under their name. The victim may only find out when they receive a bill for a claim they didn't file or if their insurance rates increase due to the "claim."

Synthetic Identities for Staged Accidents. Sophisticated fraud rings can use synthetic identities to carry out larger, more organized schemes.

How it works for insurance fraud: They use synthetic identities to purchase insurance policies for cars that will be used in staged "accidents." The criminals then make false injury claims and get payouts from the insurance company. They might even involve complicit medical centers or auto body shops that create falsified documents to support the fraudulent claims.

To stay safe from insurance fraud, people need to be proactive and aware of common scams. This involves protecting your personal information, being vigilant in various situations, and knowing how to verify the legitimacy of insurance providers and professionals.

How to Protect Yourself

• Verify Everything. Before you buy a policy or work with a professional, verify their credentials. Check with your state's Department of Insurance to confirm that the agent and the company are licensed to do business. Don't rely on information provided by the person you're speaking with; independently confirm it.

  
  

• Be Skeptical of "Too Good to Be True" Deals. Fraudulent policies often come with incredibly low premiums or promises of extensive coverage for an unusually low price. If a deal seems significantly cheaper than others on the market, it's a major red flag.

  
  

• Guard Your Personal Information. Be extremely cautious about sharing your Social Security number, driver's license number, or other personal data. Never provide this information to an unsolicited caller, email, or text. Legitimate insurance companies will not ask for sensitive information in this manner.

  
  

• Read Before You Sign. Never sign a blank insurance form or any document you haven't read and fully understood. Review your policy and all associated paperwork carefully before signing.

  
  

• Use Traceable Payments. When paying for a policy, use a check, credit card, or another traceable method. Avoid paying with cash, as it leaves no paper trail. If you must pay with cash, insist on a receipt with the company's name, date, and amount paid.

  
  

• Monitor Your Statements. Regularly review your insurance bills and Explanation of Benefits (EOB) statements. Look for any charges for services you didn't receive or any unfamiliar claims. Report any discrepancies to your insurance company immediately.

Hopefully, this will give you tips to help you keep your information safe from insurance fraud. If you enjoyed this post, let me know in the comments below. If you have any questions, please reach out via email or on social media. I'm always available.

Looking for More Useful Tech Tips? Our Tuesday Tech Tips Blog is released every Tuesday. If you like video tips, we LIVE STREAM new episodes of 'Computer and Tech Tips for Non-Tech People' every Wednesday at 1:00 pm CST on Facebook, Instagram, LinkedIn, and Twitter.   Technology product reviews are posted every Thursday. You can view previous episodes on our YouTube channel.

Sign Up for Our Newsletter! Click this link to sign-up and subscribe and you will receive every tip directly in your inbox each week.

Want to ask me a tech question? Send it to burton@callintegralnow.com. I love technology. I've read all of the manuals and I'm serious about making technology fun and easy to use for everyone.

Need computer repair or IT support services? If you need on-site or remote tech support for your Windows\Macintosh, computers, laptops, Android/Apple smartphones, tablets, printers, routers, smart home devices, and anything that connects to the Internet, please feel free to contact my team at Integral. Our team of friendly tech experts can help you with any IT needs you might have. Reach out to us a www.callintegralnow.com or phone at 888.256.0829.

Please share this with your friends and family! If you found this post useful, would you mind helping me out by sharing it? Just click one of the handy social media sharing buttons below.

The above content is provided for information purposes only. All information included therein is subject to change without notice. I am not responsible for any direct or indirect damages, arising from or related to the use of or reliance on the above content.