Northern Ireland police say it is common practice

The Police Service of Northern Ireland (PSNI) has warned small businesses that grossing up is endemic in the general insurance industry.

The warning came as the PSNI continued its investigation, in conjunction with the SFO, into an apparent £3.5m insurance fraud in Northern Ireland.

Detective chief inspector Larry Cheshire said that experts had told him that grossing up was common practice among many brokers.

"It [grossing up] has been described to me by one industry insider as endemic," Cheshire said.

Cheshire was speaking at a meeting of the Federation of Small Businesses in Northern Ireland.

He added that brokers who are guilty of grossing up could be committing criminal offences.

"As the practice is not transparent to the policyholder, it is possible that, in their efforts to disguise it, those brokers employing this practice may have committed criminal offences such as false accounting, theft or deception."

Cheshire said the "worst instance" of grossing up uncovered by the PSNI involved a policyholder that paid around £20,000 for employers' liability insurance when the premium charged by the insurer at the end of the chain was only £2,000.

Cheshire urged policyholders to combat the practice by asking brokers "hard" questions when buying cover including:

  • What commission is the broker receiving from the insurer?
  • Are there any administrative charges in addition to the commission the policyholder must pay?
  • Is there an itemised breakdown of commission and charges?
  • Cheshire also said policyholders should ensure they have been supplied with original certificates rather than photocopies.

    A Biba spokesman denied that grossing up was common practice among brokers.

    "The PSNI comments may relate to broker chains under investigation, but I don't think grossing up is endemic," said the spokesman.

    "There may be one or two bad apples, so policyholders should ensure they check all policies and documentation."

    The PSNI fraud unit is also investigating a similar fraud in Central Scotland involving around £500,000 in lost premium.