- Security TWENTY
- Women in Security
Fraud against insurers is costing the UK billions, says the Government’s Insurance Fraud Taskforce in its review of insurance fraud. Although most claims are honest, frauds follow the money, as the review’s final report puts it. Some solicitors and medics are ‘active perpetrators of the fraud’, it’s claimed. While the Taskforce was struck by good work done against such frauds, it spoke also of a lack of liaison.
The official Taskforce was announced at the Association of British Insurers’s Motor Conference in December 2014, and set up in January 2015 to assess the scope of insurance fraud and recommend steps. The report calls on insurers to share best practice and data; to defend claims more robustly; and outside insurance, for the solicitors’ regulator the SRA to investigate dishonest solicitors.
Claims for whiplash injury are a particular target for fraudsters, as it’s hard to prove or disprove; according to the report, ‘insurers suspect a substantial proportion are exaggerated or fraudulent’. Historically insurers fought fraud in isolation using small investigation teams and their own limited data to prevent repeat fraudsters; and while according to the reviewers ‘there is plenty of room for improvement’, insurance companies are sharing data more. For example, price comparison websites could help to detect fraud at the application stage; ‘yet they do not share intelligence with insurers on suspicious consumer behaviour as effectively as they could’.
The report’s authors suggest that fraud exists on a continuum, from application fraud to bogus, fictitious or intentionally inflated claims, to sophisticated organised crime. The report warns that otherwise honest people may indulging in opportunistic low-value criminal claims, and what it calls ‘the normalisation of fraudulent behaviour’ is socially corrosive and undermines social cohesion by eroding trust. “There is also no simple profile of someone who commits insurance fraud, and there are different degrees of criminality and pre-meditation. Some otherwise honest people commit fraud when the opportunity presents itself; some people commit fraud that is premeditated and some fraud can even be linked to organised crime. There are also different types of insurance fraud such as claims fraud, where an insurance claim is fictitious or intentionally inflated, or application fraud, where facts are manipulated on an insurance application form to obtain a lower premium. The Taskforce is mindful that different types of fraud require different solutions.”
James Dalton, ABI’s Director of General Insurance Policy, said: “We are pleased that the Taskforce’s report recognises the industry’s determination to protect honest customers by clamping down on insurance fraud through the £200 million a year the industry invests in tackling this problem. Initiatives such as the Insurance Fraud Bureau, the Insurance Fraud Enforcement Department and the Insurance Fraud Register mean that fraudsters are now more likely to get caught than ever and will face long-lasting and serious consequences, including a criminal record, a custodial sentence and difficulty in obtaining financial products, such as mortgages and loans.
“The report highlights that the wide ranging nature of insurance fraud, including opportunistic and pre-meditated fraudsters, and in some cases rogue claims management firms and solicitors, requires different approaches and collaboration between the different agencies involved. The report rightly says that action is needed to tackle rogue CMCs, nuisance calls and claims for noise induced hearing loss.
“The industry will do whatever it takes to protect honest customers from the dishonest minority, including ensuring that customers understand exactly what they are covered for, so that they can get the most from their insurance legitimately. The report calls for the Government to set up a body to take forward its recommendations, and we will work with whoever may be appointed to ensure that there is no hiding place for insurance fraudsters.”
The recommendations are around regulation of CMCs and solicitors, nuisance calls, late notified personal injury claims and noise induced hearing loss claims. The ABI pointsout that according to research it commissioned, 83pc of people have been contacted by a CMC encouraging them to claim. The ABI calls for fixed legal fees for all claims for noise induced hearing loss, pointing to how for every £1 paid in compensation, £3 is paid in legal fees.
Paul Philip, Solicitors Regulation Authority (SRA) Chief Executive, said: “Insurance fraud is a serious matter and we welcome the Task Force’s report and its recommendations. In particular, the Task Force called on the Solicitors Disciplinary Tribunal to adopt the civil standard of proof and we agree that has to be the right way forward. Alongside that, reviewing our fining powers would make the system more efficient and effective.
“We have, I think, made good progress on combating financial crime, not least in connection with the Home Office’s professional enablers scheme, along with our own anti money laundering work. But we know we have more to do and the report will help us with that. We will also be carrying out a comprehensive review of the personal injury market this year and that will contribute further to our understanding of this area of the market.”