Norwich Union (NU) is calling on the government to develop a "coherent" national fraud strategy to deal with the spiralling cost of organised fraud.
In a detailed report published last week, the insurer urged the government to set comprehensive targets for law enforcement authorities on fraud and increase police resources to fight fraud. It also called for the creation of a "crime does not pay" culture, through tough measures to collect restitution from convicted fraudsters.
NU also called for the creation of a UK Commission on Fraud, with representatives from government, law enforcement and the public and private sectors, to support the development of these measures.
The report, which will be submitted to the government's wide-ranging review of fraud, said that the amount of fraud was increasing because of the absence of an effective deterrent.
Prosecution levels were low, it said, and in the event of a conviction, sentences were also low. In 2004, only 18 out of the 4,000 frauds detected by NU resulted in criminal prosecutions and only nine received custodial sentences.
NU said there needed to be an increase in the prioritisation and resources given to fraud within the police and the Crown Prosecution Service. It also called for "effective" sentencing measures including reimbursing those who have lost money through fraud, costs and fines.
Chris Hill, NU head of fraud, said: "As long as fraud is perceived as an 'easy crime', we will consistently see organised gangs of criminal fraudsters escaping prosecution and coming back for a second or third go.
"We need a moral change in national perception. Fraud must become as unacceptable as any other form of serious crime in the eyes of the public."
Hill highlighted areas of priority in relation to insurance fraud: organised motor fraud and arson. He said NU had detected more than 300 such frauds in the last 12 months and he suspected this was "just the tip of the iceberg".
He told Insurance Times: "It is not reasonable for the police to investigate every [insurance] fraud. To do so would require a new police force. But before a long-term solution is found, we need short-term interim measures. We need targets for the police and to prioritise frauds that have a disproportionate impact."
Staged accidents and other motor fraud, he said, were "significant" issues, not just in relation to claims costs but also in terms of potential injury to other policyholders.
Arson was also a "growing problem", with NU seeing £10m worth of arson frauds this year alone.
Asked whether insurance fraud would be seen as a priority for the government, Hill said: "Staged accidents and arson represent a threat to public safety. There is a significant interest by organised crime in insurance fraud. Organised crime earns more from fraud than it does from drug trafficking."
Norwich Union starts fraud assessment
Norwich Union is to begin a major exercise next year to more accurately determine the amount of fraud in its book of business.
Chris Hill, head of fraud at NU, said it was difficult to assess the "underlying" level of fraud based solely on the amount of fraudulent claims detected. But he said the insurer had developed the "methodology" to identify the incidence of fraud, although he declined to go into detail.
"It will give us a feel for how effective our fraud control is and it will help us decide the level of investment to tackle fraud in the future," he said.
In 2002, NU prevented £46m worth of fraud. This increased to £71m in 2003, rising to £103m in 2004. Hill said the figure would be "significantly higher" in 2005.
The programme will be run over the course of 2006 and 2007.
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