The Government has published the interim report of The Insurance Fraud Taskforce.
Mark Allen, Manager, Fraud and Financial Crime, at the trade body the Association of British Insurers (ABI), said: “The insurance sector has invested significantly in initiatives, such as the Insurance Fraud Bureau, the Insurance Fraud Enforcement Department and the Insurance Fraud Register, that are delivering a sea-change in the way insurance fraud is being tackled. But we must maintain momentum to continue to protect honest customers.
“The Taskforce provides a timely platform for pressing for a legislative and regulatory environment that’s conducive to fighting fraud, not hindering it; a judicial approach that recognises the harm caused by insurance fraud; and a claims framework and processes that do not unintentionally encourage spurious claims. And there’s a real opportunity for the sector to promote the value of insurance and reappraise the way it communicates with its customers to finally debunk the myth that insurance fraud is a victimless crime.”
The report set out the problem, the current counter-fraud work in the field, and what the taskforce proposes to do next.
The report described fraud as an expensive problem for insurers and the industry estimates it spends more than 200m per year against it. In an introduction, Andrea Leadsom, Economic Secretary to the Treasury, quoted estimates that the insurance sector is facing £1.3 billion of detected fraud, with a further £2.1 billion undetected. She added: “This isn’t right and it certainly isn’t the case that this is a victimless crime. Fraud should no longer be a cost of business but rather a threat which has been extinguished.”
The report defined claims fraud as where an individual or organisation makes a fictitious or intentionally inflated insurance claim, for example someone claiming for non-existent jewellery or for a slip or trip which never took place. And application fraud is where an individual or organisation manipulates facts on their insurance, application, to lower their premium. The report admitted that there is no simple profile of a ‘fraudster’ who does insurance fraud. An opportunist may be otherwise law-abiding, while organised gangs are behind ‘cash for crash’ scams. Such gangs may rely on opportunists to complete their fraud.
Data sources include the Insurance Fraud Register (IFR) of known offenders; Claims and Underwriting Exchange (CUE) to combat multiple claims; and the Motor Insurers Anti-Fraud and Theft Register (MIAFTR). MyLicence is an initiative between the insurance industry, the Driver Vehicle and Licensing Authority (DVLA) and the Department for Transport which lets the insurance industry access DVLA driver data.
The taskforce is looking at whether the market is encouraging fraud – for example, third-party personal injury claims. As for what drives policy-holders to do fraud, the taskforce quotes from a new study for the ABI by Perpetuity Research, led by Prof Martin Gill. And the taskforce is asking if courts take such fraud seriously enough, and whether the legal system deters spurious claims.
About the taskforce
The Insurance Fraud Taskforce was set up in January 2015. Its aim is to investigate the causes of fraudulent behaviour and recommend solutions to reduce the level of insurance fraud, to ultimately lower costs and protect the interests of honest consumers. The Taskforce will produce a final report by the end of 2015. For the 32-page interim report visit – https://www.gov.uk/government/publications/insurance-fraud-taskforce-interim-report
