The ABI has launched a register of insurance scammers to help reduce the £2.1bn hit the UK takes from this behaviour every year
Fraudsters are now costing the UK economy a staggering £38bn per year, according to the latest figures from the National Fraud Authority (NFA), with insurance fraud alone costing an annual £2.1bn.
So what can insurers do to tackle this mounting problem? We talked to AXA’s group fraud risk manager and Insurance Fraud Bureau (IFB) member Richard Davies about the sector’s battle against scammers and how the launch of the ABI’s new insurance fraud register – a record of proven fraudsters - is going to help.
Q: The latest statistics from the National Fraud Authority are very worrying. How will the industry’s new insurance fraud register help?
A: There is a big gap in our current control structures. We know that opportunistic fraudsters will move from company to company committing similar scams, but until now we have been unable to share that information in a way that allows us to make better quality decisions about who we are going to cover.
The insurance fraud register is being designed as a service that can be used at any point in the policy cycle to help insurers decide whether or not they have been asked to provide cover for someone who has previously committed fraud. This is going to be the one industry database that all insurers will go to.
Q: What lines will it cover?
A: It will cover personal lines and commercial lines, as well as the life insurance and health insurance sectors. I anticipate that the majority of the data will initially come from the general insurance sector. But we have interest and project support from a number of life insurers who will be supplying us with pilot data.
Q: Insurers so far have been criticised for failing to share data in a joined-up fashion. Will this remain a big challenge?
A: The launch of the register is evidence that insurers are definitely joining up their approach. This database will be run by the IFB and will help address that particular criticism.
Q: Industry commentators point out that industry databases only cover insurance data. Should the insurance fraud register provide a wider range of cross-sector data, including those of public bodies?
A: Most definitely. The register has been designed to do exactly that. We don’t want to exclude any sectors or any parties that want to provide data. Through the IFB we are pushing quite hard to build data-sharing relationships with other bodies, and we do want to build those relationships. But they have to be properly controlled.
My feeling is that at the moment insurers are in a better place to share data compared with public sector bodies who may struggle to get agreement from the government to do that. But those conversations have started, and we are hoping to make progress within the next couple of years.
Q: What are the biggest challenges that lie ahead in the fight against fraud?
A: We have a lot of databases out there that are controlled in a number of different ways. I would like to see some centralised control so we end up with one place that we can go to in order to access all of that shared data in a more effective way than we currently can.
In addition, we must protect the interests of honest policy holders. We have to be confident that only proven fraudsters are getting on to the register, because that information could be used to determine some serious decisions made by insurers; we don’t want to exclude any honest customers from getting cover.