Insurance Times’s Fraud Charter focused on the regulation of private investigators and the role that professional enablers and internal staff have to play in facilitating and fighting fraud

Fraud Charter

1 To what extent are professional enablers deliberately involved in insurance fraud?

Delegates at the Fraud Charter agreed that lawyers and doctors are key players within the professional enablers’ debate.

It was highlighted in one case that a medical doctor involved in completing injury reports was known to be a shareholder of an accident management company.

Sabre Insurance chairman Keith Morris said: “There’s no doubt some medical professionals are not acting in a professional way.

“Obviously it’s in their interest to find there is whiplash, so whoever is appointing them appoints them again.

“It’s the medical report that determines from a court’s standpoint whether a fraud has happened or not.”

ABI fraud and financial crime manager Mark Allen said: “There are a number of people that would fall into this category: lawyers, doctors, engineers and GPs.

“It is the portal for fraud through which claims are legitimised.”

We say …

The referral fee ban that came into force in April aims to discourage the facilitation of fraudulent claims, but stronger measures are still needed to regulate the industry.


2 What is being done to identify and tackle professional enablers?

There was a general consensus among delegates that not enough is being done by regulatory bodies to check the work being carried out by lawyers and doctors during a claims procedure.

Carpenters Law partner Donna Scully said: “It is really difficult and it is expensive. You find people, you name them and you send them to the regulator, but they don’t have the resources, although I’ve no doubt they have the will.

“We want fraud to be fought harder. It could be a roundtable issue if you can get the regulators to work together. If you prosecute a doctor or a solicitor –
my, what a message that would send.”

ABI fraud and financial crime manager Mark Allen said: “In terms of trying to apprehend them we have the Insurance Fraud Bureau and Insurance Fraud [Enforcement] Department that have a specific strategy to combat fraud perpetrated by professional enablers, and most of their success has been in claims management companies and vets.

We say …

There needs to be more collaboration between regulators so that information on professional enablers can be easily shared among insurers.


3 What does the future hold in terms of regulating private investigators and how will it affect the industry?

Legislation to regulate private investigators is currently at a draft stage and is expected to be passed as law by next autumn.

It is unclear if the regulation by the Security Industry Authority will go beyond just affecting private investigators, however.

Cunningham Lindsey head of fraud Christian Aplin said: “The scope of the legislation as it stands indicates the activity that will be regulated will involve some aspects of work not regarded as investigation, like desk work.

“Some of the stuff that claims handlers do potentially could be licenceable activity.”

Sabre Insurance chairman Keith Morris added: “[Regulation] won’t make life difficult at all. It will make life slightly more tiresome for private investigators because they will have to go through the regulation. It will just be more bureaucracy.”

We say …

The Financial Conduct Authority is also carrying out a probe into the incentivisation of private investigators by insurers that could lead to further reform. Watch this space.


4 To what extent are internal staff involved in and facilitating fraud?

Employees at large insurance firms are being increasingly targeted by corrupt outsiders for customer data.

Admiral Insurance fraud operations manager Susan Evans said that over the past three months the company had been made aware of four instances where approaches had been made directly to staff.

Evans said: “It is becoming an industry-wide problem.”

Admiral has controls in place to detect and prevent fraud, such as banning iPads and mobile phones on the office floor and having detection technology on its computer systems.

Hastings Direct head of counter-fraud Paul Priestley said: “We have a very strong policy at Hastings in terms of data protection and whistle-blowing.”

ABI fraud and financial crime manager Mark Allen added: “Internal fraud can be done complicitly with a member of staff or through blagging, where a person tries to dupe a member of staff into releasing details. It’s fraud and it’s illegal.”

We say …

The scope of the problem is as yet unclear – that needs to be clarified in order to understand better how to tackle it.


5 What are the common motives and aspects of fraud from an internal point of view?

The types of people involved in internal fraud range from members of discredited claims management companies to people planted in firms and to fraudsters on the outside.

Personal data is very valuable as the details can be used by individuals to submit new claims, or by criminal enterprises, but it is as yet unclear how widespread this practice is within the industry.

Carpenters Law partner Donna Scully said: “It is very lucrative because if [criminals] get those leads it could be worth hundreds of thousands of pounds.
“If you are prepared to carry out application fraud the likelihood of you doing a claims scam is also high.”

Hastings Direct head of counter-fraud Paul Priestley added: “The risk is that you would have plants from accident management companies that are after old cases or personal data they can use to sell on.

“Mass data is something that a lot of people would want.”

We say …

Data is valuable and insurance companies should work together to give more publicity to the issue. It is a sensitive topic as no-one wants to be seen to have a vulnerable system.


Fraud is a growing concern

Jessica Reid,
Live content development editor, Insurance Times

The third Fraud Charter event of 2013 generated some interesting discussion around professional enablers and private investigators and the roles that they play in fighting (or facilitating) insurance fraud. Members of the Fraud Charter agreed that unethical third parties are in the minority, but welcomed stricter regulation and auditing to help fight the problem. Internal fraud was also highlighted as a growing concern, with brokers and insurers in the room admitting that they’re struggling to keep a handle on staff being targeted for personal data records.

At the event we also announced the production of the inaugural Fraud Report 2013, which is published on 20 November. Members of the Fraud Charter had their say on what the report should cover and also helped contribute to an exclusive Insurance Times survey that aims to get a snapshot of fraud in UKGI. Read some of the preliminary findings here: