Animal anarchy

The majority of households now have a pet of some kind, be it a goldfish, a cat or dog, or something altogether more exotic such as a bird of prey or a poisonous spider. Like humans, pets get ill, pick up injuries and eventually die. It is estimated that every year, one out of three pets will require veterinary treatment of some kind as a result of illness or injury. It is therefore unsurprising that pet insurance has become big business, with several major insurers now offering a variety of policies that range from accidental death cover for small mammals to third party liability cover for exotic animals.

Insurers that already offer these policies are stepping up their marketing and advertising campaigns to attract new customers. Other insurers that do not already offer pet cover are now realising the market potential and are giving serious consideration to entering the market.

Unfortunately, new customers are not the only `species' attracted by the increase in publicity surrounding pet insurance. Fraudsters too have realised the potential to make a fast buck. They are only too aware that many insurers now employ sophisticated methods to weed out fraudulent motor and standard household claims. Databases, psychological tactics, medical and engineering evidence are all used to keep the cost of insurance fraud down in these traditional areas.

Although fraud repudiation rates have pleasingly risen in these more `traditional' areas - fraudsters have not gone away.

Softer targets
They look for the weakest link in an insurer's armour, the way in which they can make the most money with the least effort. Fraudsters have turned their attentions to easier pickings and what they perceive to be softer targets, with pet insurance being a prime candidate. Pet insurance's very nature lends itself to fraud as the scope of some of the policies available is so wide that there is generally far less, if any, physical evidence for an insurer to examine when attempting to detect fraud.

One of the largest existing pet insurance providers has already reported an increase of 150% in the last ten years in certain third party pet insurance claims .

Most household pets are small and can be easily moved around or hidden, or even disposed of, making it easy to fake a claim that a pet has run off or got lost. Inflated insurance claims for the cost of advertising `reward' posters can then follow. If a pet is later "miraculously" found, pet recovery costs can be claimed.

Pets do not talk back, which means that claims are sometimes made for skin disorders or other pet injuries that have been deliberately inflicted on unsuspecting animals.

While it is certainly distasteful, it is a mistake to think such claims will not be made because a pet is seen to be a loved animal and that its owner would never do anything to intentionally cause it harm. The fact is that most animals that are the subject of fraudulent claims will not be pets at all, but animals that have been deliberately obtained for the purposes of submitting fraudulent claims. In America a trend has already developed whereby fraudsters advertise along the lines of "unwanted pets wanted", so they can obtain animals for a nominal cost or no cost at all from individuals who, for legitimate reasons, may wish to find their pet a new home.

Frozen puppies
One of the more serious fraudulent pet insurance cases involved a registered dog breeder in Nottingham, who kept the frozen bodies of dead puppies in her freezer and thawed them out at intervals before submitting false insurance claims at £500 a time. Other instances have included a claim that a pet dog had rampaged through a living room, damaging curtains and furniture, frightening the family's valuable pet parrot to death. The incident had been completely fabricated.

Claims can also be made for veterinary treatment fees using false documentation, fabricated kennelling, cattery or aviary costs, recovery expenses for lost animals, vet referral fees and accidental death claims.

Existing fraud detection/prevention measures need to be utilised for pet insurance claims as well as for more traditional claims. The natural emotions associated with losing a family pet or having a family pet sustain a serious injury mean that psychology has an obvious role to play. In addition, new methods and procedures need to be put in place to tackle the specific problems that fraudulent pet insurance claims create.

As claims handlers who deal with personal injury claims have had to develop a basic knowledge of the human anatomy and common injuries, claims handlers who deal with pet insurance claims need to learn the basics of pet medicine so they can spot basic discrepancies such as deliberately inflicted skin disorders. The channels of communication between insurers and bodies such as the RSPCA and the Royal College of Veterinary Surgeons must be improved so repeat offenders are caught and bogus claims are weeded out.

Lessons can be learnt from our experience of fraud in other areas so that steps can be put in place today to prevent an epidemic tomorrow.

Jamie Taylor is head of insurance fraud and motor unit manager at DLA

Pet insurance at its best
Lulu, a chocolate Labrador, was able to walk again after having nearly £10,000 worth of veterinary treatment paid for by pet insurer Petplan.

The dog had been diagnosed with severe hip dysplasia at 15 weeks old. She underwent three operations to realign her knee and hip without success. But after two further operations and a revolutionary `external fixator' she was back on her feet.

The Petplan policy offered "cover for life" which meant that all six operations were covered in full.

Mrs McMurrough, Lulu's owner said: "I cannot believe she is the same dog. Had I not had insurance, I would now be in serious debt."