Industry experts assemble for Insurance Times’s latest virtual Fraud Charter roundtable, identifying the key fraud trends that have emerged as a result of the coronavirus outbreak
The financial hardship resulting from the economic impact of the Covid-19 pandemic has created “an opportune market for ghost brokers” as potential policyholders seek discounts and deals to alleviate financial stress.
Speaking at this month’s virtual Fraud Charter event, held on 28 July 2020, Stephen Dalton, head of intelligence and investigations at the Insurance Fraud Bureau (IFB), explained: “As we’re returning to the roads now, we’re seeing an increasing level of ghost broker activity and, clearly, as recession bites and people are looking to save money, it’s an opportune market for ghost brokers who can actively advertise their wares.
“People are going to be looking for deals, they will be vulnerable and susceptible to it, which is one of the reasons we’re looking to run a campaign in September around ghost broking, among other things.”
Attendees also noted that ghost brokers are targeting key workers and NHS staff in particular, although Dalton added that on the whole, ghost broking levels “appear to be returning to normal”.
Covid fraud trends
The focus on promptly supporting NHS employees and key workers during the coronavirus outbreak has been exploited by fraudsters too, added Fleur Lewis, head of fraud at GoCompare – especially in terms of identity theft.
In terms of application fraud, more individuals are labelling themselves as key workers to fraudulently obtain the aid that insurers are offering this demographic.
Lewis said: “We’ve seen an increase in key worker email addresses being used and the majority of them have been invalid, but there have been a few that have been used across a number of applications.
“Where we’ve seen these applications go through, there’s been a shift in claims within a week [of] the policy being taken out. And then the pressure’s been applied to settle the claims quickly because they are a key worker and tend to be associated with high storage costs and things like that, wanting to choose their own suppliers and things.”
A notable trend observed by all attendees was claims farming – Dalton said this is “still a significant issue”.
Jason Potter, head of fraud operations at BLM, said he had seen an increase in commercial vehicle claims during the pandemic, as these fleets have still been operational despite the drop in personal vehicle traffic.
Aviva’s UKGI fraud manager David Royal, on the other hand, discussed an increase in fire claims because it “is one of the easier areas to put through claims if you’re suffering from financial stress”. He added that most Covid-19-related claims at Aviva, however, have been outside of the GI sphere, instead occurring within healthcare and pensions investment.
Accidental damage claims for televisions has been another coronavirus trend, said Scott Clayton, head of claims fraud at Zurich.
He said: “I’ve seen my absolute fair share of television claims to do me a lifetime. Accidental damage claims to televisions and policies that have been taken out with the sole purpose of making a claim, ie claims very close to policy inception, seems to be the only major trend that we are seeing as a direct result of Covid.”
Dalton added “Covid was starting to be used by some physiotherapists as a reason to prolong prognosis and treatment” in terms of personal injury claims, while the use of Google ads and spoofing has also “raised its head again”, with fraudsters using “aggressive approaches”.
Anna Baker, Ticker’s anti-fraud manager, said: “There’s been numerous reports of people trying to sell fake protection, such as masks, and companies offering to Covid-free your house, jet washing your drive or cleaning houses. So [fraudsters] have diversified to make money.”
Although the industry is rife with rumours that new claims management companies (CMCs) are setting up shop with either ‘Covid’ or ‘coronavirus’ in their names so as to harvest Covid-19-related claims, Mike Baker, part of the FCA’s claims management transition team, told Fraud Charter attendees that this is not the case.
As far as he was aware, it was just one fraudster selling these types of internet domain names. However, he added that the FCA is “mindful” this could become an issue.
He said: “We haven’t seen any uptick in new firms trying to set up new CMCs specifically to deal with [Covid-related claims]. Obviously, the challenge we’ve got is that existing CMCs that have personal injury as part of their permissions can do this anyway, so they don’t need our permission to do that.
“If you’re a claims management firm, there’s potential. As soon as we were seeing claims or concerns over lack of PPE, then immediately that springs to mind, certainly if you’ve got that mindset, that there’s a potential to claim out there and CMCs will be latching on to that at some stage. I think it’s inevitable, it’s just we haven’t seen it yet.”
Potter added that firms within the motor sphere have moved their focus since the pandemic to curate more claims possibilities.
“One thing that we did notice was that the protagonists that are traditionally involved within the motor side of the industry were venturing into other product lines, so Japanese knotweed, that sorts of claims activity. We did see an increase in that. That’s something we’ve been tracking,” he said.
Employer liability speculation
Dalton further acknowledged that employer liability claims were “something emerging” if employees believe they contracted Covid-19 at work, or if those working from home are not provided with the right equipment to perform their jobs safely, for example around display screen equipment (DSE) rules. He added that this trend is still speculative, however, as he is “not aware that there’s been any significant increase in that sort of activity”.
He continued: “The speculation is if you’re requiring your employee to work from home and you’ve not given them the right kit, they could claim potentially for workplace injury, repetitive strain, bad back. If you’ve not provided the right [DSE] kit for somebody that you’ve insisted has to work, then there is a potential argument there, there could be a claim there.”
Michael Hallam, Biba head of technical services, said that more customers are looking at cyber insurance to mitigate the risks of employees working from home.
He said: “Members are telling us that customers are having more conversations at board level regarding the taking up of anti-fraud measures, particularly with people working from home and looking at their cyber issues and exposures and the purchasing of cyber cover, possibly looking at their overall budgets to really bolster insurance in that area. People look to exploit other people in these times.”
Emerging from lockdown
As the pandemic progresses, Fraud Charter attendees agreed that opportunistic fraud will be on the up, as well as baggage and money claims within travel insurance. Dalton added that fraudsters may even duplicate claims across lines such as home and travel.
Alan Hayes, legal director at Carpenters, also speculated whether passenger claims would return to normal now that people are making more social journeys and are travelling with more passengers in vehicles following the easing of lockdown restrictions.