Insurers are faced with a variety of staged accidents, fraud and exaggerated claims. It needs tackling, but how seriously do insurers take the issue, asks Steve Comley, managing partner of Renaissance Business and Investigation Services. Not very, seems the answer.

Most commentators believe that fraud losses to insurance companies are spiralling. The Association of British Insurers puts the figure at £645 million per year. However, how can anyone accurately measure the reality of the situation. Everyone blames everyone else. New initiatives are being suggested, but just what is actually being done NULL

The whole insurance industry appears to expect the police to investigate every potentially fraudulent claim. Yet when a discrepancy is reported and does not lead to wide scale arrests, they are dismayed. As an ex-CID officer, I know that the police hardly have enough staff and resources to deal with reported crime, so they are unlikely to go looking for more.

Statistically, the police are closely monitored for performance and must produce results against crimes actually reported. The insurance industry has inundated the police seeking advice and requests to liaise. This is frequently seen by the police as counter-productive and their reluctance to co-operate with insurers is often the cause of much frustration.

Crime numbers
Insurers expect a policyholder to have reported a claim implying a criminal act to the police. Without a crime number the insurers often refuse to deal with such a claim. I am not certain where the origin of this requirement or probable policy condition came from, but nowadays due to other pressures on police, reporting such crimes only adds to statistics.

The police rarely visit the aggrieved party or claimant following a crime complaint unless it is considered detectable or there is a particular purpose. I suspect that most aggrieved persons never see the police – for example, a car theft is often reported over the phone. I'm sure this will not detect fraudsters. The same principle applies to an alleged traffic accident where the police only have an interest where injury is reported.

You may see a police officer if you have suffered a burglary but even if this was “staged”, it is highly unlikely that the police will investigate further than recording details of items allegedly stolen.

The crux of the problem is that police are unable to provide a solution, but many insurance companies do not invest the time, money and expertise necessary to effectively address fraud. As a result professional criminals stay one step ahead of insurance companies. The recent Gallup survey on behalf of Saga Insurance which suggests that many people believe it is acceptable to inflate insurance claims, adds fuel to the fire. Insurance companies are hit with a double whammy, professional criminals on the one hand and ordinary law-abiding citizens on the other.

Since Renaissance Business and Investigation Services was formed in 1992, I have felt that persuading the industry to fight back is an uphill task. Is it all a paper exercise with nobody really interested in tackling fraudNULL
It is no good relying solely on the police – they can only do so much. To successfully prosecute, good solid evidence must be produced and that costs money. Nor are loss adjusters the salvation. They are specialists in their own right and should be restricted to doing what they are there for, to help insurers adjust and settle the claim correctly.

Experience counts
The most proven method of fraud control is for experienced investigators to speak face to face with each claimant and witness. By taking statements, investigating accidents and if necessary undertaking surveillance, they are able to detect potential fraud. For example in one recent case a drunken guest at a wedding ended up in hospital and claimed not to know how he got there, despite the fact he had a set of car keys. His father-in-law, reported the car stolen and damaged in an accident. Following a visit by one of my investigators at a cost of £175 no claim was made – saving £5,000.

With the onset of Woolf, it is now imperative that early investigation is undertaken more than ever. I have heard of a number of insurers who do not investigate claims due to their belief that such action will slow the claims process. This need not be the case with the correct arrangements being set up beforehand. Whatever happened to contractual service contractsNULL Very few suppliers can boast of such contracts being offered by insurers whom surely should be seeking the best value on the market NULL

Investigators are often the only people a claimant sees from insurers. They are in a position to speed up the process, improve service and customer care, bring about early settlement as well as detecting fraud.