He 'buys' insurance from Turkey but he's never been there

The New Paper, 8 August 2006
By Tan May Ping

Online shopper becomes victim of identity theft. One insurer now offers coverage against it

HE had never been to Turkey, much less bought anything from there. So Mr Kelvin Khoo, 34, was surprised to find several charges in Turkish lira on two of his credit card bills last year. The sums were not huge - $23 to be deducted from each card every month - but they were enough to arouse the insurance agent's suspicions.

What had happened? He had become a victim of identity (ID) theft.

Mr Khoo had used the cards to buy tech gadgets over the Internet. Someone had probably stolen his card details online, he said, and signed up for insurance policies from a Turkish company in his name. Mr Khoo told the banks he could show them his passport to prove he had never been there. 'I work in an insurance company, so why would I buy policies from overseas?' he said. The banks eventually cleared the charges, which meant he didn't have to fork out a cent. Mr Khoo was lucky he could prove his case. Not all victims are.

Although ID theft may not be widespread here yet, a Credit Bureau Singapore (CBS) spokesman expects the numbers to rise, given the growing problem overseas and the growth of credit facilities at home. So far, CBS has had only a 'handful' of such reports. But as an indication of an emerging problem, people can now even buy insurance to protect themselves against ID thefts.

American Home Assurance Singapore (AHA) has probably become the first to offer coverage for ID theft losses.

Its plan, ID Guard, covers up to $5,000 worth of losses for each occurrence and up to $10,000 for legal fees or other costs chalked up to resolve the fraud. The annual premium is $50 for an individual plan and $90 for the family plan. The family plan covers those related by blood or adoption and living under the same roof as the main beneficiary. AHA president Rudi Spaan told The New Paper it saw a need to develop an ID theft product.

In June 2005, US company CardSystems Solutions exposed 40 million credit card numbers to fraud, including 20,000 from Singapore, after hackers planted a virus in the company's computers. Here in Singapore, there were 11 cases involving the fraudulent use of another person's IC or passport in 2004. Last year, the number rose to 25, while 12 cases were reported this year up until June. While AHA provides comprehensive ID theft insurance, what about other insurers?

Last October, Tenet Insurance started to offer coverage for legal expenses and other costs incurred to resolve ID thefts - but not for the actual losses themselves. An article in The Straits Times last November said Tenet's plan was a first for the insurance industry then.

Although such insurance products are common in the US and Europe, the General Insurance Association (GIA) also believes AHA is the first to offer such a product here. Four other insurers contacted said they do not sell ID theft insurance.

American International Assurance told The New Paper it is still exploring such a plan. NTUC Income's general manager, Mr Freddy Neo, said his firm would consider introducing it should the demand arise. As for AXA Insurance, it said one of its home insurance plans already covers wallet thefts - and that includes losing the IC.

The president of GIA, Mr Derek Teo, said it boils down to demand and supply. 'We're not aware that there has been a demand for this type of cover in Singapore until now. 'Cases of ID theft for significant financial gain remain extremely rare.' He said ID theft insurance is useful as it covers monetary loss which the victim usually doesn't know about until it's too late.

But consumers seem less sold on the idea. Mrs Liew Mui Lee, 54, who shops on the Internet at least once a week, said: 'If something happens, I can go back to the creditor and say it's not me. I'm also wary of insurance companies preying on our fears.'

And despite having been a victim of ID theft, Mr Khoo was also not keen. 'The banks were prompt in waiving the charges. Anyway, my credit limits are low. 'ID theft is not a common crime here. I might consider it only if I travel a lot.'

--------------------------------------------------------------------------------

STEALING IDENTITIES

Identity Cards (ICs)
ICs are casually given to security guards, or handed over freely at handphone shops to sign up for new services.
People also readily fill in their IC numbers in contest forms. Fraudsters can use such stolen information for their own gain, or sell the information to others.

ATM-skimming
Fraudsters fit skimming devices to ATMs, swiping data off cards inserted into the slot. The data is used to duplicate the cards. With the customer's PIN (usually recorded with a secret camera), the thieves can then make unauthorised withdrawals. The New Paper reported on 3 Jun that a skimming device was found at a POSB ATM in Woodlands.

Card-skimming
Skimming can also occur when a retail employee makes a copy of a customer's credit card details from the card's magnetic strip before processing payment. The details are then sold to fraudsters.

Phishing
E-mail supposedly from banks or businesses try to lure the unwary to bogus websites to steal passwords or credit card information. In July, Citibank, OCBC and the Monetary Authority of Singapore were hit by phishing attempts.

Key-logging programs
These programs are hidden inside other software, which then infect the computer. They silently copy the keystrokes of users and send information like user names and passwords to the crooks.

--------------------------------------------------------------------------------

700 signs up for new policy

SINCE American Home Assurance Singapore's ID Guard was rolled out in February, 700 people have signed up for it - more than two-thirds under its family plan. And in the coming year, it hopes to sign on at least 2,000 more customers, said its president, Mr Rudi Spaan.

Other than ID theft, Mr Spaan said ID Guard also insures against money taken during an ATM robbery, theft of personal effects including the cost to replace documents like your IC, driver's licence and passport, and injury due to theft. Claims are based on documentary proof like credit card bills, police reports, ATM receipts and bank records, among others. So far, none of AHA's clients has fallen victim to ID theft.

That's why Ms Koh Yen Yen, spokesman for its rival, Tenet Insurance, said she doesn't think people here are willing to pay extra premiums to insure against the crime.

Said Ms Koh: 'Consumer awareness of its threat at this moment is still very low. So most consumers are not likely to pay additional premiums to protect themselves against such risks.'

Tenet's coverage now merely offers victims access to claims specialists and lawyers to restore their credit records.

The plan - a free add-on to its home insurance policies - covers up to $7,500 in legal fees.

Why not go further and protect against actual losses?

'We believe assisting our clients to engage these institutions early will help to avoid the losses incurred in most instances,' Ms Koh said.