PR is essential when it comes to changing perceptions about the insurance industry. Rachel Gordon investigates how successfully this is being utilised in the long-term fight against fraud.
Insurance fraud is in the news — and for most insurers, this is just where they want it to be. If the crime is kept out of the media, this reinforces the perception for opportunists that it is somehow acceptable, while for organised fraudsters a low profile suggests they are even more likely to get away with it.
There are now more insurance fraud managers who are polished media performers. This is not the case across the board, but a number speak regularly on the topic and have done much to boost awareness that this is a crime — and that it pushes up the cost of premiums for everyone else.
Behind the scenes, there are rumbles about the Insurance Fraud Bureau being under-resourced and underfunded. But, no one could dispute that — since its formation in 2006 — it has done a sterling job in boosting knowledge of 'crash for cash' fraud in particular. The chances are, pre-IFB, many ordinary folk would have no understanding of staged accidents. Now, the subject is mainstream — and that is bad news for the fraudsters.
There are plenty of cynics when it comes to public relations — and some who think former Prime Minister Harold Wilson had a point when he described it as 'organised lying'. But helping journalists understand that insurance fraud is serious is far from mere spin.
It is now widely quoted that this is a crime that costs £1.9bn, or adds an average £44 to each policy. True, the figures are arguably educated guesswork, but they provide the media with a useful hook. Likewise, people are now also more likely to realise that insurance fraudsters are often involved in other crime — and the police are now more likely to be interested in this.
Glen Marr, director of the IFB, agrees the counter-fraud industry has come a long way. "We have a very active media programme and, across the industry, a number of fraud managers are strong communicators, where once it was cloak and dagger stuff."
He explains that PR can bring tangible results — over and above just educating people. "Last summer I was on the BBC," he recalls. "The angle was crash-for-cash, but I also spoke about the IFB's Cheatline and there was an incredible response. A lot of extremely useful information was passed on, some of which we are now working on to secure prosecutions. It is clear many people do not find insurance fraud acceptable and want to help."
Progress in PR
Lorraine Carolan, head of Beachcroft's claims validation team, agrees there has been progress on the PR front. "Look back a few years and insurers were very cautious — they did not want to talk about fraud work. Now the tide has turned dramatically. Premiums are rising fast in some areas and, once people realise this is in part linked to fraud, they are a lot less tolerant."
She adds that publicising examples of perhaps where a child has been injured in a crash-for-cash case change the views of Joe Public, eliciting more empathy for insurers as well as the victims. "When Glen Marr of the IFB was on the BBC, the IFB was inundated with calls — insurers are being seen less as fair game."
The IFB witnessed a 151% increase in Cheatline reports in January 2011 compared to January 2010. Some 60% of reports to Cheatline are made online, most others by telephone and there is the odd letter and text, says Mr Marr. Information is passed back to insurers, allowing them to then probe further.
While the IFB focuses on big ticket fraud stuff, there is no doubt that some insurers are coy about referring to their counter-fraud strategies, for fear they will be viewed as too harsh in their attitude towards paying claims. However Mihir Pandya, insurance fraud manager for Allianz, comments: "That is an old fashioned view. Good PR is valuable for an insurer — and also brings benefits to you as an employer. The fact we have an expanding and high profile claims team means people want to join us. It now provides a credible career option."
Mr Pandya also wants to see the media start to cover insurance fraud in other areas outside of motor, such as in liability. "We're working on a number of cases that we plan to publicise," he says. But, he believes PR also has to be controlled. For example, one story picked up by the press was about a gang involved in staged accidents, but were also 'Facebook friends'. He comments: "Fraudsters will now know they have to take down their page or remove people — we must be careful not to reveal too much, it's irresponsible."
Meanwhile Cath Williams, complex technical services director for Cunningham Lindsey's investigation services team, says: "If anything, counter-fraud professionals need to be more vocal. The industry is now much more efficient at measuring the cost of fraud — and that is a message that is particularly relevant now."
She adds that insurers should also let people know they have a regulatory and indeed moral duty to tackle fraud. "Why should fraudsters be profiteering because insurers do not have a tight framework in place? We have an obligation to do this — and to publicise what we do and achieve."
Ursula Coulibaly, LV's head of financial crime operations, agrees: "Our responsibility is to protect the honest customer. We also have a duty to educate people, to explain that even what they perceive to be exaggeration, for example, is a criminal offence."
Nikki Grieve-Top, claims psychology director for Crawford & Company, supports this: "PR has helped insurers move away from the perception that insurance is permissible, towards zero tolerance. We should be trying to make it as unacceptable as drink driving. But, I would also like to see stronger and wider messages coming out of the insurance industry, notably that people know the consequences. I can't see the point of any insurer not emphasising that they will fight fraud — after all, do they want such people on their books?"
From a legal perspective, Mark Hudson, partner with Horwich Farrelly, says: "It is positive that in recent years, the whole mood of the media and to some extent the judiciary has changed. You don't see anti-insurer coverage — they are seen as being responsible in not only prosecuting but also preventing accidents. I would say that, only five years ago, some judges were sceptical about the scale of slam-ons but publicity has helped demonstrate how widespread this is. It has also helped explain how involved and complex some claims are, bringing in other parties such as credit hire firms for fraudulent purposes."
Broker Derek Rigby, claims manager for Sagar Insurances, a member of independent broker buying group Brokerbility, is based in Accrington, Lancashire, which is close to the crash-for-cash hotspots of Blackburn, Burnley and Bolton. He says insurers must be relentless in their pursuit of these organised fraudsters. "It's an extremely serious problem and most people want to see fraudsters prosecuted." He agrees that tentacles can be spread wide — and that he has seen letters from solicitors pressing for claims payouts that are dubious in nature to say the least.
"Insurers have got to get on top of this epidemic and do as much as they can to publicise the damage these fraudsters are doing. As brokers, we will pass our suspicions on to an insurer. But we also want to see honest claimants treated fairly — being tough on fraud does not mean making honest customers feel they are being interrogated. Brokers are concerned about the quality of the claims service. There is a feeling among fraudsters that, if they are persistent, they will get their claims paid and some insurers have been too quick to settle — for example, if they are worried about a big credit hire bill. If insurers think fraud is present, then they need to start defending more cases."
Simon Douglas, director of AA Insurance, comments: "Car insurance customers particularly have seen their premiums rise very quickly because of fraudulent claims; they want to see the insurance industry do something about it. Many people are rightly outraged that the selfish actions of a minority directly affect the pockets of many.
"The dilemma lies in dealing with a culture that says 'it's OK to rip off insurers'. This is fuelled by the aggressive sales tactics of certain accident management and personal injury firms, which have proliferated over the past three or four years."
He adds: "It is important to get that message across and the AA has been upfront in its media approach by highlighting examples of fraud and pointing out the consequences."
This also means publicising that insurers are working together through the use of shared databases — and that fraudsters could start to feel the heat from an insurance industry funded police unit, a recommendation made by the Transport Select Committee earlier this month. Mr Douglas says: "Our belief is that this will quickly pay for itself and underline the fact that the industry needs to show it is serious about tackling what is a real blight on the insurance sector. Such a unit could extend to other insurance, outside motor, and will make the work of the IFB much more effective."
In conclusion, Tom Gardiner, head of loss prevention at Aviva, comments: "Increasingly, insurers are using sophisticated analytics, scorecards and sharing data to identify suspicious claims more accurately and quickly. Because of this there should not be — and nor would we want there to be — a negative impact on the experience of the majority of genuine honest customers. You can have robust fraud controls as well as excellent claims service."
Detection and prosecution
He adds: "We believe we have a responsibility to our customers, shareholders and wider society to prevent, detect and prosecute insurance fraud. Neither do we believe that the investigation and prosecution of insurance fraud is incongruent with a positive customer and brand image — I don't believe that consumers want to deal with a company that takes a soft approach to fraud. Recent economic conditions will increase the financial stress upon businesses and households, and is likely to increase the motivation for insurance fraud. Insurers need to be responsive to this threat."
The insurance industry has not always been the biggest proponent of PR — and its people often do not want to hog the limelight. But, if they are to take on increasingly sophisticated and determined fraudsters, they must communicate they are up to the task, that they will prosecute where necessary — and that fraud prevention is an intrinsic part of customer service.
How the IFB hits the headlines
It may surprise many that the Insurance Fraud Bureau team is only 11-strong but, in terms of media coverage, it punches above its weight. Annie Staunton, director with Peak Marketing, has worked with the IFB since July 2006 and remains responsible for its PR strategy.
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