NAIC Highlights Insurance's Role in Identity Theft Protection and Recovery

Identity theft is increasing in the U.S., driven by rising cybercrimes such as data breaches and scams, according to recent reports highlighting nearly a 10% rise in Federal Trade Commission (FTC) complaints in 2024 compared to 2023. The National Association of Insurance Commissioners (NAIC) and the National Insurance Crime Bureau (NICB) emphasize the growing importance of protective measures and the role of insurance in identity theft recovery. Key preventative strategies include using multifactor authentication, strong unique passwords, cautious management of personal information online, and regular monitoring of financial accounts and credit reports. Insurance products designed to support consumers after identity theft incidents typically cover legal fees, lost wages, and administrative costs but do not reimburse stolen funds. These policies may be standalone or bundled within broader homeowners or renters insurance packages and sometimes include credit monitoring and alert services. However, consumers are advised to verify the extent of coverage, including exclusions and deductibles, with their insurers. Identity theft can indirectly impact premiums due to increased fraudulent claims and administrative costs, underscoring a broader market effect beyond individual victims. In cases of data breaches at third-party organizations holding personal data, state laws often dictate the provision of complimentary credit monitoring or identity protection services. After identity theft is detected, immediate actions recommended include changing passwords, notifying financial institutions, disputing unauthorized transactions, and filing reports with the FTC and local law enforcement. The NICB, supported by numerous insurers and related entities, actively combats insurance fraud and identity theft through analytics, education, and advocacy. Meanwhile, the NAIC serves as a coordinating body for state insurance regulators, establishing standards and supporting regulatory oversight to protect consumers in the insurance market.