Conference Report

INSURANCE FRAUD BUREAU "BIG STEP" IN FRAUD FIGHT.

The Insurance Fraud Bureau, which was unveiled at the Post Magazine conference, was hailed as "the biggest step" in the fight against insurance fraud for five years.

As revealed by PM last week, the IFB, a new industry-wide net for catching fraud gangs involving insurers and top level fraud specialists, hopes to be up and running in six months.

Axa fraud risk manager Richard Davies, who is helping spearhead the launch, stressed that the industry should "not beat itself up" over its successes so far, given that detection rates have already improved 14% in two years.

However, he called on insurers to "collaborate, not co-operate" with regards to the IFB, "because collaboration is all about commitment, and that is what is needed".

Reflecting on the past he added: "We have spent a lot of time talking but this has led to unco-ordinated action and sub-optimal results. We have not done ourselves justice.

"The IFB is a big step forward for the industry - one needed for several years," added Mr Davies, who noted that only by working together would UK law enforcers take the industry's efforts to combat fraud and prosecute those caught seriously.

Joining him on the podium was Lloyds TSB Insurance's head of insurance customer management, Trevor Bedeman, who warned delegates that fraudsters were "well organised and well funded" by, among other things, "drug money". He added: "We have to see them as a competing business and, without any collaborative effort, they have the advantage."

INDUSTRY SUPPORTERS

The IFB currently has 10 insurers signed up who have given the embryonic body seed money, and there was a lot of interest at the management briefing from other potential supporters - including lawyers, loss adjusters and technology providers.

However, Mr Davies said that for now it was just trying to engage insurers, to make sure it clears the first hurdle: "We are building something up, something that works. I don't want us to fall at our heels in 12 months' time."

Mr Bedeman added: "We have not ruled out getting broader participation."

FRAUD SHOULD NOT BE SEEN AS "AN ACCEPTABLE FORM OF CRIMINALITY"

Nick Starling, head of general insurance at the Association of British Insurers, reiterated the trade body's call for the crime of insurance fraud to be seen in the same bad light as drink-driving.

Commenting on the ABI's own findings, which have found that 5p in every pound of insurance premium is lost to fraud, he noted there was a significant problem of policyholders who exaggerate the value of valid claims, because they feel it is acceptable "to grab back what they deserve" after paying premiums for years.

Mr Starling went on to note legitimate policyholders suffered in other ways because of the actions of this small minority, in that they may be subject to more "evasive questioning, slower claims payments and suspicious claims handlers" as insurers look to catch fraudsters.

He described fraud, both in commercial and personal lines, as "an acceptable form of criminality" and noted the success of a recent campaign in Ireland, which emphasised it was not a victimless crime, by using billboards of a person with a bandaged finger with the strapline: 'thank you for the holiday'.

Reflecting on how drink-driving passed from being socially acceptable, he added there was "no magic bullet" but that that it had taken a concerted campaign to convince the government and the law enforcers that it was an expensive problem before action was taken. "Only then did people realise that they would be caught if they did drink and drive and that they would face a fine and driving ban. They also discovered that when they went to insure their car again, it would be more expensive."

As for what the ABI is doing, Mr Starling revealed that a fraud seminar will be run on 25 November, and that it is engaging bodies such as trade associations, the Confederation of British Industry and the Federation of Small Businesses, on how to tackle the issue and raise its profile.

CALL FOR TOUGH JUSTICE OVER INSURANCE FRAUD

The justice system must get tougher on fraudsters, if the proposed Fraud Bill is to be an effective weapon against cheats, it was claimed.

Julian Smart, a partner at Berrymans Lace Mawer, called on the courts to make sure there are long sentences for those convicted under the new law.

He said: "Judicial sentencing needs to toughen up, as that would deter would-be fraudsters. The missing factor is that we have to get the police to take up the cases and the task of convincing them is on-going.

"They won't go for the minor cases but hopefully we will see some more action on their part."

Under the existing proposals, those convicted of the new fraud offence will face up to 10 years in jail. The Bill is due to come out some time next spring.

Mr Smart said this will be a useful tool in the fight against fraud, given the complexities of the current system, although he bemoaned the fact there is no specific offence of insurance fraud proposed at present.

He added: "The reform bill will simplify the law on this issue. At the moment there is no single offence of fraud. There are eight different cases relating to fraud at the moment and lawyers can use very clever answers to get people off the hook.

"Things will be simplified. However, there is no insurance specific fraud, which is a missing factor."

INDUSTRY WARNED OVER POLICE DATA TRANSFER

The insurance industry has been warned not to make the same mistakes as previous bodies have, when transferring data to the police.

A senior officer said once information from the DVLA's road-tax database was moved to the police's automatic number plate recognition technology, several problems had occurred.

Ian Roberts, intelligence manager for traffic and ANPR, revealed that some motorists were receiving penalty notices, even though they had bought road-tax, because the system was so out-of-date.

Insurers and brokers are still working to fully link the Motor Insurance Database with ANPR technology, in the battle to catch uninsured drivers.

"The system for road-tax has been massively incorrect for months," he revealed. "In some cases it was a couple of months out. There will be hell to pay if the insurance industry makes those mistakes."

He added that the police are committed to ensuring uninsured motorists face heavy penalties, saying: "We are stopping drivers and we are seizing cars and that will continue.

"Having the insurance data on ANPR will only help the fight. ANPR was initially designed to combat terrorism, so the police could track who was moving in their vehicles.

"The system has so many more uses and the technology really does work now.

"It's so good at reading number plates that is it almost too good in some cases, as it even reads railings as a line of number ones."

TOOLS ARE ONLY AS GOOD AS THE USERS

Ray Green, director of fraud training company Focus Group, emphasised the role of training in the battle to combat fraud, during the morning session, Empowering the Professionals.

Reflecting on his time in the mobile phone industry, where he helped put together a training programme for employees at his company, Vodaphone, and others, he said: "Technology and databases are very helpful tools to combat fraud but at the end of the day it is the people that use them that decide how effective those tools are."

He added: "As an industry you have to look at training programmes to develop fraud professionals."

DISASTER RECOVERY PAPER TRAIL CLAIMS

A disaster recovery expert highlighted how that sector can greatly aid the battle against insurance fraud.

Georgine Thorburn, managing director of Document SOS, said companies like her own can unearth several clues to spot potentially fraudulent claims.

She said when there is a fire, paper can be recovered that may prove possessions that had been claimed for never belonged to the claimant. She added that her firm is able to uncover burnt paper and files that may give loss adjusters and insurers clues as to the motive behind the incident.

"Up to 95% of paper can be restored even after a big blaze," Ms Thorburn insisted. "Really packed-up paper is not destroyed in a fire, so it is easily restored.

"By getting paper back, we can detect what was written. This could affect the insurance claim, as we may have a better idea of the possessions they owned."

She added that after the Piper Alpha North Sea oil disaster in 1988, recovered paper was legible after it was recovered - despite being under water for weeks.