Fraudsters using social engineering to scam insurance companies
Published: September 4, 2017
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Industry News
Insurance fraudsters are implementing a new way to trick companies, and the method is spreading according to one expert. By employing social engineering schemes, fraudsters can confuse companies into giving away money.
Bill Jennings, crime manager for insurance company Beazley, says the method is becoming increasingly popular in the United States. However, he adds this is not just the USA’s problem. Canada, and particularly Ontario, are already rife with fraud, while the new trick will likely be employed further afield.
Jennings points out insurers are already onto the attack method and are controlling exposure of low sub-limits to protect themselves.
Social engineering scams typically see attackers impersonate an executive in a company, or sometimes by pretending to be a vendor. Businesses can be deceived into releasing funds. While it seems a rudimentary method, technology advances mean fraudsters have become more sophisticated.
Wire transfers from social engineering scams resulted in transactions of around $1.6 billion between October 2013 and December 2016.
“I don’t think this is purely a US problem at all. I think this is pretty global, and there also seems to be a likelihood that fraudsters will attack branches of companies that are further from the home office,” Jennings said.
As is usually the case with fraudsters, they are targeting smaller companies that may not be best protected to thwart such scams.
“Most of the larger financial institutions have pretty good controls in place before they transfer funds, so they’re going to verify and authenticate the information that comes through,” Jennings said. “But if you get into a mid-sized or smaller commercial company, they are more likely to fall victim to a fraud.”