Read the full results of our survey which show that barely one in 20 insurance professionals believe current measures will succeed

Fraud Charter

Insurance professionals remain sceptical about industry efforts to combat fraud, according to Insurance Times research.

A survey, carried out to mark the launch of the Insurance Times’s Fraud Charter initiative (see ‘Pass notes’), shows that barely one in 20 (6%) respondents believe that existing moves will be sufficient to tackle the issue.

They were vastly outnumbered by those (68%) who believe that the initiatives, including the Insurance Fraud Enforcement Department (IFED) recently established by the City of London police and the soon to be launched Insurance Fraud Register (IFR), will not be enough.

The IFED reported last week that it had made its first arrest after a tip-off from an insurer of a suspected fraudulent claim of £35,000 for an allegedly stolen BMW.

ABI assistant director, head of financial crime, Mark Allen defended the industry’s response to fraud at last week’s first meeting of the Fraud Charter advisory group. He said: “We should not lose sight of the great amount of work being done across the insurance industry.”

He added that the IFED would help to identify gaps in the industry’s efforts to beat fraud.

The survey also shows that 70% of industry professionals reported an increase in fraud over the past year, while 64% believe many policyholders think it is acceptable to make a fraudulent claim.

Application fraud

On application fraud, 40% of respondents said they have seen an increase in the problem over the past year, compared to 24% who have not. But 23%said that claims fraud remained a more serious problem than application scams, compared to 22% who reported the opposite.

According to the survey, 92% of industry respondents believe that professionals such as doctors and solicitors should be struck off if they are found to have colluded in an insurance fraud.

But the survey shows a balance in favour of the insurance industry funding IFED, with 50% backing the idea compared to 43% against.

And it says that 79% of respondents believe insurers have encouraged the growth of fraud by being insufficiently willing to tackle low-value suspected fraudulent claims.

There were 139 responses to the survey, carried out earlier this month.

The membership of the Fraud Charter advisory group comprises Cunningham Lindsey head of investigation services Chris Aplin, RSA head of counter-fraud and financial crime John Beadle, IGO4 chief executive Tom Cooper, GAB Robins head of counter-fraud and investigations service Neil Daniel, AXA UK group fraud risk manager Richard Davies, Zurich chief claims officer Tony Emms, DAC Beachcroft partner Antonia Ford, AXA Personal Lines head of counter-fraud Steve Gaywood, International Fire Investigators & Consultants chief executive Bobby Gracey, Keogh director of counter-fraud strategy James Heath, DWF partner Paul Holmes, First Central director of fraud Glen Marr, Sabre insurance chairman Keith Morris, Allianz insurance fraud manager Mihir Pandya, and Brit claims director Stephen Roberts.

Pass notes: Fraud charter

What is the Fraud Charter?
The charter is a pan-industry initiative that Insurance Times is undertaking in partnership with AXA Personal Lines to develop new mechanisms to tackle insurance fraud. The charter will be presented to the government at the end of the year.

What are the goals of the initiative?
To develop the next steps that the government should take in the fight against insurance fraud, outline what the industry can do to boost its own efforts to tackle fraud, identify ways for the sector to work together more effectively to address the issue and spread best practice more widely.

Isn’t a lot being done already?
The Insurance Fraud Bureau’s budget has been doubled and the ABI has taken a series of steps to tackle the issue, including funding the establishment of the City of London police Insurance Fraud Enforcement Department. But most recent ABI statistics, which show a 9% jump in identified insurance fraud in 2010 alone, point to the huge scale of the issues facing the industry.

How will the Fraud Charter add value to existing work?
Insurance Times recognises that insurers have made a lot of progress in combating fraud. The Fraud Charter seeks to bring together the whole of the industry, including brokers and the supply chain, to tackle the issue.