Insurance plan to fight rise in identity theft

CIGNA says customers will be alerted early to any fraudulent transactions. Photo / Kenny Rodger

New Zealanders can now insure their most personal asset in the country's first identity theft insurance scheme.

More than 1100 incidents of "identity misuse" were reported last year.

"Identity theft is one of, if not the, biggest growing areas of fraud in the financial services area," said Insurance Council chief executive Chris Ryan.

Under the scheme, introduced by credit agency Veda Advantage and the CIGNA insurance company, any person who signs up for cover will receive a copy of their personal credit history, detailing every check run against them.

Whenever that person's details are checked against the Veda Advantage database - whether for legitimate or illegitimate use - an alert will be sent out within 24 hours.

CIGNA Insursance's national contact centre manager, Mark Kenning, said the quick dispatch time was the key to the success of the scheme.

"The moment they walk into a major lender and borrow money using stolen identification, it will trigger the alert," he said.

Then the customer could move quickly to prevent their identity being used further.

Mr Kenning said any person applying for a credit card or to buy something on hire-purchase was automatically checked for registered bad debt.

"And with this product the person whose details are used will be alerted to it."

If fraudulent identity use was confirmed, police would be notified.

Police spokeswoman Annie Coughlan said police did not comment on private schemes, but supported any initiative that "actively prevents crime".

Identity theft was very destructive for individuals, she said.

The managing director of Veda Advantage NZ, John Roberts, said identity theft had "really amped up" during the recession.

He recalled one incident in which a fraudster racked up $5000 worth of debt for a female student.

The thief had found the young woman's bank statement in the rubbish bin, created a duplicate driver's licence and another fictitious statement, and used the documents to buy goods.

The first the young woman knew of it was when her bank queried a default on her credit card, caused by the fraudster's illegitimate purchases.

"That took months and months to unravel," Mr Roberts said.

Unlike in countries like the United States - where an identity is reportedly stolen every two seconds - Veda Advantage represents about 95 per cent of New Zealand's credit agency market.

"The US has five or six major credit agencies, in New Zealand we're lucky just to have Veda," said Mr Kenning.

* How it works

* Customer receives copy of personal credit file

* Every time his or her personal details are accessed, an alert email or letter is sent within 24 hours

* If concerned, customer contacts Veda Advantage and they investigate

* Notice goes on personal credit file alerting legitimate lenders that investigation under way

* If fraudulent identity use is confirmed, matter is handed over to police.