With fraudsters sharing inforamtion, and the insurance industry and authorities failing to follow suit, are criminals gaining a competitive advantage? June Lynch explains.
Criminal enterprises are aptly named - some of them have layers of organisational complexity which would baffle even the most sophisticated of global businesses.
There's no doubt about the incredible effort put into developing new ways to get around the law, as well as evading the enforcement authorities.
In particular, fraud groups, whether the criminal equivalent of a FTSE 350 company or a small start-up, operate in a world where keeping pace with what could be considered a constantly developing sector is an essential part of staying in business.
That gives them something akin to a competitive edge and, without wishing to imply any undue admiration, it means that those of us involved in trying to thwart fraud have a huge challenge on our hands.
In July, research from Experian revealed that 12 million pieces of personal information were traded online by fraudsters between January and April this year.
Barely a week goes by now where fraud doesn't feature somewhere in the news, insurance-related or otherwise.
The real concern here is that criminal fraud gangs are sharing information. They're collaborating in the way businesses and public bodies often say they will, but don't always achieve in a meaningful way.
The industry needs to respond in kind. The creation of the Insurance Fraud Register is an important step forward and a welcome statement of intent, sending the message to criminals that the industry has mobilised against them.
The government's Fighting Fraud Together (PDF) initiative has brought together parties from insurance, banking, business, law enforcement and others to encourage information sharing and bring about the kind of concerted effort we need.
There's a detailed action plan which shows the specific tactics which will be employed to tackle this long-standing issue.
It'll take time for this action to have an impact, assuming that everyone involved is sufficiently committed to maintaining momentum. For the moment, there seems to be little abatement in the volume of fraud being directed at insurers.
In the past 18 months or so, Kwik-Fit Financial Services alone has invested over £2m in a range of preventative fraud measures, which is a strong indicator that the wolves are still at the door and we are fighting hard to win this battle.
That's why the government's involvement is a must - the Fighting Fraud Together initiative has to work, and the impetus to succeed has to be continued.
The stakes are high for the criminals who participate in fraud, but the returns are currently clearly worth the risk.
By bringing together insurers and other partners, the government can tighten the net in awareness and enforcement to make that cost/benefit analysis seem like a less attractive option.
We can't allow the current situation to continue. The ABI has done some excellent work to set the wheels in motion and create effective mechanisms by which insurers and brokers alike can share information with each other and the wider world.
Following the impending introduction of the Insurance Fraud Register, expected during the third quarter of 2012, there's a real feeling of pace and intent starting to develop around this issue.
Continued government support is the next link in the chain, and is the conduit by which a cross-sector anti-fraud initiative will best succeed.
Not only does it lend confidence to the various business and industry bodies that they're not alone in their struggle, but an aggressive, high-profile anti-fraud stance from the government sends a message to perpetrators that the risk of being caught is increasing by the day.
June Lynch, managing director, Kwik-Fit Financial Services
- Over 20 start-ups pledge support for proposed insurtech trade body
- Blog: Loss adjusters are developing new skills to tackle escape of water claims
- Amanda Blanc makes first appearance as ABI chair
- CII warns 'long way to go' even as gender pay gap numbers fall
- Lloyd’s sees diminished results even as it shrugs off 2017 losses
- Marsh's JLT deal 'could drive further M&A'
- Zurich CUO takes on RSA UK role