Fraud continues to result in significant financial losses for businesses each year. Instnt’s Identity Fraud Loss Insurance addresses this challenge by transferring verified identity fraud losses off the balance sheet rather than leaving firms to absorb them directly. By improving cost visibility and recovery timing, institutions can manage fraud in a way that aligns with operational and growth objectives. The following sections provide an overview.
- What It Is: Identity Fraud Loss Insurance is a risk-transfer model that reimburses firms for verified identity fraud losses tied to onboarding decisions. Instead of absorbing those losses internally, the financial impact is shifted to an insured policy backed by A-rated carriers
- Why It’s Important: As digital activity has expanded, fraud has become a more consistent operating consideration for financial institutions. Industry data reflects the scale of this activity globally, underscoring why many organizations now focus on improving predictability and recovery rather than elimination alone. Insured approaches support more consistent financial outcomes over time.
- What It Covers: This coverage applies to financial losses resulting from false, stolen, or synthetic identities, first-party fraud where there is no intent to repay, and account takeover events that lead to loss. While coverage terms vary by policy, the objective remains consistent: transferring identity-based fraud losses off the firm’s balance sheet and into an insured claim.
Key Benefits:
- Transfers verified identity fraud losses from the firm to an insured claims
- Replaces unpredictable write-offs with a defined premium
- Supports capital efficiency and planning confidence
- Strengthens customer trust through consistent, insurance-backed protection Identity Fraud Loss Insurance is not just a protective measure, but a financial risk-management tool that improves predictability, accelerates recovery, and supports sustainable growth.
How Instnt Works
Instnt evaluates identity risk at onboarding using explainable AI to assess false, stolen, synthetic, first-party, and account takeover risk. When Instnt approves an identity, that onboarding decision becomes insured. If identity fraud later occurs, the resulting loss is handled as an insured claim rather than a write-off. Claims are reviewed efficiently and typically resolved within approximately 30 days, supporting faster recovery and more stable financial outcomes.
What Fraud is Covered by Insurance
Identity fraud loss insurance applies to identity-based fraud events that create financial exposure during onboarding. This includes synthetic identity fraud, first-party misuse, third-party identity theft, and account takeovers. By transferring verified losses to insurance, institutions reduce large, unpredictable write-offs and stabilize performance.
The FBI’s Internet Crime Report for 2023 shows how serious the issue has become, with billions in losses tied to compromised accounts, misused credentials, and identity-related schemes that directly impact onboarding and customer authentication.
| Fraud Type | Business Impact | Common Targets |
|---|---|---|
| Synthetic Identity Fraud: | Losses from applicants built using both real and fake data that pass traditional checks. | Digital lenders, BNPL firms, credit unions, online banking platforms. |
| First-Party Fraud: | Customers apply with real identities but never intend to repay, leading to charge-offs and recovery costs | Credit card issuers, lenders, fintechs, BNPL providers. |
| Third-Party Fraud: | Losses caused when a fraudster uses someone else’s real identity without their knowledge to open an account or gain access. | Banks, credit unions, fintechs, digital lenders. |
| Account Takeover: | Losses when fraudsters gain access to an account using stolen or misused credentials. | Banks, fintech apps, digital wallets, credit unions. |
Policy Scope
Instnt’s policy applies to identity-based fraud losses tied to approved customers. Claim submission is designed to be straightforward, with insurers managing adjudication once a verified loss is confirmed.
How AI Supports the Model
AI improves both onboarding decisions and claims efficiency by identifying patterns, reducing false positives, and enabling faster validation of events. While AI lowers fraud incidence, it does not eliminate fraud entirely. The insured structure ensures that when fraud does occur, the financial impact is not retained by the institution.
This combination of decisioning and insurance is what differentiates the model.
That is where Instnt changes the game.
Instead of absorbing fraud costs, institutions simply submit a claim with one click. Approved losses are paid back within 30 days or less, giving businesses a level of certainty that AI alone cannot offer.
AI can improve detection. Only Instnt can eliminate the loss.
Financial Impact: Reducing Loss Volatility
Fraud losses remain a recurring operating cost for many institutions. By transferring approved-customer fraud losses to insurance, firms reduce earnings volatility, protect margins, and improve cash-flow consistency. Capital that would otherwise be held against unpredictable losses can be deployed more productively.
“Chief Finance and Risk Officers, along with their teams, can finally add Fraud Loss Insurance to their risk management programs to shift significant losses off their balance sheets and turn risk capital reserves into working capital, fattening margins and growing their business at the pace they desire, for cents on each dollar of loss.” – Sunil Madhu, Founder and CEO of Instnt
Supporting Growth Without Increasing Risk
Traditional fraud management often limits growth by forcing tighter approvals. With insured onboarding outcomes, institutions can approve more legitimate customers without increasing financial exposure. Automation and streamlined claims handling also reduce operational burden, allowing teams to focus on revenue-generating activities.
Building Customer Trust and Confidence
Effective fraud handling directly impacts customer trust. Institutions that resolve fraud quickly and consistently retain customers at higher rates and reduce downstream servicing costs. Insurance-backed onboarding demonstrates a commitment to protection that extends beyond detection alone.
Turning Identity Fraud Risk Into a Managed Exposure
Fraud does not need to slow your business goals anymore. With the Instnt approach, identity fraud can shift from a major loss to a controlled, insured risk that supports growth.
“Organizations that implement a layered defense strategy – combining advanced detection tools, predictive analytics and comprehensive fraud loss insurance – will be better equipped to navigate the upcoming risk environment with improved capital rations, margins and top-line growth.” – Sunil Madhu, founder and CEO of Instnt
The impact feels almost too good to be true: safer growth, higher approvals, and clearer financial performance. But it’s real. Insured onboarding turns fraud from a major unknown into a predictable, manageable part of doing business.
Strong protection also creates a real edge in the market. Customers trust firms that take safety seriously, and insured onboarding proves that identity protection is built into the experience. This helps firms rise above competitors that still rely on detection alone.
AI-powered identity checks make this even stronger. With better signals, faster decisions, and insured outcomes behind every approved customer, firms finally have a way to grow boldly and safely at the same time, something traditional fraud programs could never deliver.
With Instnt, fraud doesn’t have to be a fixed cost. What once seemed impossible, cutting losses, unlocking capital, improving trust, and supporting long-term growth all at once, is now real, proven, and available.
FAQs
Is Instnt an AI tool or an insurance product?
Instnt uses AI to assess identity risk, but the core solution is Identity Fraud Loss Insurance. When Instnt approves a customer and fraud happens, the loss is insured — not just detected.
How hard is it to submit a claim?
Claim submission is simple — firms can press one button to file a claim. Approved claims are reimbursed quickly, helping firms recover fast and keep financial performance steady.
How does Instnt help firms grow while reducing fraud losses?
Instnt gives firms a new way to grow safely by combining identity risk checks with insured onboarding. Traditional fraud tools can lower risk, but they cannot stop every bad identity or remove the financial hit when fraud slips through. Instnt changes that.
When Instnt approves a customer, any verified identity fraud loss tied to that onboarding decision is insured. This means firms can confidently approve more good customers without worrying about unpredictable fraud costs. It also frees up capital that would normally be kept in reserve for fraud, letting teams invest in marketing, operations, and new projects.
By turning identity fraud into a predictable, insured cost, Instnt helps firms grow faster, improve margins, and build stronger, more trusted customer experiences — something detection-only systems cannot offer.
