Identity theft is one of the fastest rising crimes in America, affecting 10 million people each year. So where are Americans turning for identity theft solutions? The answer may surprise you. According to a new National Association of Insurance Commissioners poll, consumers seeking identity theft insurance tend to look to insurance companies (38%) rather than credit card companies (34%) and banks (32%). That provides the insurance industry both an opportunity and a matching obligation. Of course, the opportunity is to offer consumers policies that cover identity theft losses, plus supplemental access to third-party identity management services. The obligation, however, is to educate them about this oft-misunderstood crime.
Seldom does a week go by without a report on a hacked database, containing thousands or even millions of sensitive personal data records.
Though credit card fraud is the most common and widely publicized result of an identity theft, the crime can manifest itself in all areas of day-to-day life. For example, medical identity thieves can run up hospital bills and create potentially dangerous medical record discrepancies, and illegal workers using stolen identities can make tax time a nightmare for unsuspecting victims. But that’s not all. Identity thieves have taken out mortgages, car loans and even enrolled in prestigious universities using others’ identities.
The question on consumers’ minds is simple—What can I do to protect my identity?—but the answer can be more complicated. Fortunately, the insurance industry is in the perfect position to provide help. A good identity theft insurance policy will help protect consumers against various identity theft-related losses. Moreover, good education offers invaluable peace of mind, giving consumers pointers on how to prevent identity theft from occurring, as well as the best ways to reconcile its fallout.
In some cases, people need to be reminded of simple day-to-day habits that can help them protect their personal data. Shredding credit card and bank statements, and keeping their Social Security or Medicaid cards out of their wallets are examples. Basics aside, alerts about more sophisticated schemes, like bogus wireless networks set up to steal info from unsuspecting Web users, or “spear phishing” attacks in which scammers steal information by impersonating a person’s friends or colleagues through online correspondence, provide consumers with useful information that they ordinarily wouldn’t seek out. As more states pass laws allowing consumers to take more control of their personal credit files by limiting who can access them, such information is more important than ever.
LESSONS
While most identity theft education is geared toward the consumer, there are lessons for organizational managers as well. Database disasters can be mitigated with basic storage and encryption policies. Insider fraud can similarly be contained by identifying sensitive information within an organization, limiting who has access to it, and establishing rigorous security protocols for those employees with access. Often, business or government leaders neglect to take data security seriously until it is too late. Data losses can take a toll on an organization’s budget and employees’ morale, not to mention undermining customers’ trust in the organization.
Suffice it to say, whether applied to one’s personal or professional life, the proactive benefits of identity theft education are not lost on the discerning consumer. It has been shown to improve retention and increase customer satisfaction, as well as bring in new customers via word-of-mouth advertising—arguably the best form of referral. For independent agents who are able to offer more personalized services than their institutional counterparts, the benefits of identity theft education are particularly salient. This value-added product, while not readily quantifiable, continues in the tradition of personalizing the customer experience—a business imperative in a world rapidly becoming price-fixated.
Education is a great complement to identity management and resolution services from a third-party partner that offers victim assistance in resolving ruined credit and other consequences of identity theft-related fraud. Left unchecked, the damage done to a consumer’s credit can prevent the consumer’s access to mortgages, car loans and other borrowing opportunities. However, the more practical and up-to-the-minute the information accessible to consumers, the more efficiently they can protect their finances and identity.
So why should insurers supplement this and other offerings with identity theft education? The answer is simple: it fills a need and provides a great service for the policyholder.
Steve Christenson is president of Scottsdale, Ariz.-based Identity Theft 911.
