LIMRA, SPARK Institute gear up to launch fraud-fighting strategy
With criminals seeking to plunder American retirement accounts, LIMRA and SPARK Institute are joining forces to address this rising threat with a series of actions and initiatives for the near- and long-term.
“Criminals are working together to attack American retirement accounts, so it’s incumbent on industry members to cooperate to defend these accounts,” said Tim Rouse, executive director of the SPARK Institute. “Protecting participant and policyholder accounts continues to be a top priority for SPARK and LIMRA members.”
Russell Anderson, head of Financial Crimes Services, LIMRA and LOMA, said efforts are stronger when industry experts work together. “Our members have realized over the past several years that, when it comes to fraud, the industry is even stronger when we work together to share ideas and best practices.”
According to Rouse, the partnership will bolster both groups’ existing efforts to “grow and enhance their fraud prevention programs.”
“We are stronger together than individually, and this collaboration is intended to make the industry even stronger,” he said.
4-step action plan
Their combined strategy involves a four-step action plan:
1. Conduct a Fraud Prevention Benchmarking Study
2. Roll out consumer education campaigns
3. Share real-time intel with industry members
4. Establish an annual Financial Services Fraud and Data Security Summit
Insurance fraud on the rise
Fraud — and especially identity exploitation-based fraud — is a growing threat that may not subside “anytime soon, if ever,” Rouse said.
According to data from FraudShare, a fraud detection system for insurance and retirement companies introduced by LIMRA in 2019, investors and retirees have experienced an increase in account takeover fraud, where someone takes ownership of an online account by pretending to be the owner.
There was a 37% increase in this kind of fraud in 2022, and a further 13% jump in 2023.
Industry study planned
LIMRA and SPARK plan to start their anti-fraud efforts by gathering intelligence on the threat to retirement accounts through a comprehensive Fraud Prevention Benchmarking Study to be conducted within the first half of this year.
“This study provides the industry insights into how their peers’ fraud prevention programs are structured and organized to combat fraud, allowing them to better assess and enhance their programs,” Anderson said.
The results are intended to serve as a foundation for data-sharing within the industry, which LIMRA and the SPARK Institute identified as critical for anti-fraud efforts to be a success.
“Through this collaboration, we hope to grow the number of companies participating in LIMRA’s annual financial crimes services and fraud prevention benchmark study,” Anderson added.
The need for public education
The plan also involves public outreach through education programs aimed to combat fraud, particularly by making Americans more aware of how they can protect themselves against fraud.
“We will pool resources to identify common threats and develop relevant educational pieces to help sponsors, participants and policyholders better protect themselves and their accounts,” Anderson said.
An educational campaign about insurance fraud awareness and the threat to retirement accounts could be a pivotal initiative, as industry experts on a Coalition Against Insurance Fraud webinar last fall suggested some instances of insurance fraud are due to a general lack of “insurance literacy.”
Information-sharing will be crucial
Actively sharing real-time insights with industry stakeholders will be a key component of the fraud prevention strategy.
“People who commit fraud share information and so should we,” Anderson said.
“Our experience shows us that attacks on one provider later show up as attacks on other providers, so [our] cooperation better prepares members,” Rouse added. “We can ensure more information, ideas and best practices are shared across groups, making them even more effective.”
To achieve this, the groups will leverage technology including FraudShare, which was upgraded in 2022 through a partnership between LIMRA and global data analytics company Verisk.
FraudShare can automatically flag suspicious activity and notify owners, among other fraud-prevention capabilities.
“Technology that enables members to share fraud incident data directly with each other plays an important role when it comes to preventing fraud,” Anderson noted. “LIMRA and SPARK will work together with their members to promote broader adoption of these tools, such as LIMRA’s FraudShare, to help members better combat fraud.”
Annual summit to bring stakeholders together
A yearly Financial Services Fraud and Data Security Summit will take industry collaboration a step further, according to LIMRA and SPARK’s plan.
On top of just receiving data from the organizations, stakeholders will be able to engage in meaningful dialogue and participate in ways that will ideally strengthen collective anti-fraud measures.
“SPARK and LIMRA are planning to work together to develop a broader industry event that will include both member groups to benefit from the power of pooling resources,” Anderson said. “The retirement services and insurance industry believe working together makes everyone stronger.”
LIMRA is one of the largest American trade associations, representing more than 700 members. SPARK Institute is a Washington-based non-profit organization dedicated to supporting retirement planning.
LIMRA is one of the largest American trade associations, representing more than 700 members. The Society of Professional Asset-Managers and Record Keepers (SPARK) is a Washington-based non-profit organization dedicated to supporting retirement planning.
Rayne Morgan is a content marketing manager with PolicyAdvisor.com and a freelance journalist and copywriter.
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