Direct Line Insurance counter fraud manager Mark Chiappino on how the industry is trying to fight crime, the impact of the Civil Liability Act and how we need to move away from ‘compensation culture’

The industry’s invested a lot in collaborating to combat fraud. Are these efforts paying off?

Mark Chiappino

The main areas where we see collaboration working really well is in data sharing and analytics. We’ve got databases such as the Claims and Underwriting Exchange (CUE), which gives a steer as to which claims we should be looking at in a lot more detail. 

At Direct Line, we’re also very happy with the work of the Insurance Fraud and Enforcement Department (IFED), which is part of the City of London Police and is funded by the insurance industry. I did some research with our intelligence unit and we’ve actually had over 325 years of custodial sentences handed down on our cases since IFED was established, so we see that as a real success and deterrent in the market. 

IFED prosecutions are quite high profile and we use them in our media and social media, especially in the context of the ‘crash for cash’ arena. We do quite a lot with Claimed and Shamed on the BBC.  That resonates with people because it’s quite easy for them to spot the fraud and nobody like their premiums to go up as a result of the fraudsters. Anything we’re doing to catch people and prosecute them is always a good thing in the public eye. 

How difficult is it for the industry to keep up with the fraudsters?

There are two types of frauds we deal with. One is the organised fraudsters, working in gangs and often involved with other criminal activity. They are very organised they know what they’re doing and they move quite quickly. 

Then there are the one-off opportunists who might have been involved in genuine accidents, but exaggerate their injuries. 

We’re always looking to stay one step ahead of them. We want to get in and out of an investigation as quickly as we can, because, if it’s a genuine claim, we want to let that customer go on their claims journey with us. But we’ve also got to remain vigilant and agile, so that we can keep pace with the fraudsters.

With the organised gangs it’s an attrition game. They send in dozens to hundreds of claims every week or every month to all the different insurance companies and expect a proportion of those to be found out and not paid. But they also hope that a proportion get through our fraud checks and that some will get paid. 

At Direct Line we’re pretty confident that we’re defeating most of those, but that’s how these guys are operating, on a volume basis.

With the opportunistic/spurious claimants, does this reflect wider societal attitudes towards insurance fraud?

Some people think insurance is fair game and they don’t see it as criminality, just an opportunity to make a bit of money. That’s not helped by the claims markets with people constantly receiving texts and phone calls encouraging them to claim. The police prosecution side of things is part of that overall strategy to dissuade people from making claims that they shouldn’t really be making.

What will be the next big battleground, from a fraud perspective?

We believe the whiplash reforms that are coming in next year with the Civil Liability Act 2018, are going to change the way claims are presented. It will possibly change the tactics the fraudsters are using and how third-party claimants present their claims. 

It will certainly change the amount of money they can receive by way of the tariffs. The reforms set a tariff for certain types of injury, so we’ll be expecting people to claim for something else. They may also be more aggressive in targeting cyclists, motorcyclists and pedestrians, because they are not part of the whiplash reforms. 

What we’ve found in the past is that when legislation changes, the organised fraudsters don’t just go away. They don’t look at the legislation and think, “we’re not going to commit fraud anymore”. They just tweak their tactics. They may even move to a different industry, but they will still try to commit fraud because that’s what they do. 

Is the compensation culture in the UK still a big issue despite changes to legislation?

The change doesn’t happen overnight. The introduction of seat belts and the drink driving ban were cultural shifts that took quite a long time to establish as the norm. We hope this compensation culture around insurance fraud moves in a similar direction and becomes unacceptable over time. 

It’s a multi-strand approach. We need legislation to do it, we need our own defences and disruption, and we need a strong industry voice, which the ABI gives us. We also need advertising. 

All these things add up and hopefully will move people away from thinking they’ve an entitlement to claim when they don’t.