Although claims cheats are a major target for insurers, they are proving less of a priority for the police. Michael Faulkner reports
This week it emerged that one of the UK's largest police forces is hampering the insurance industry's efforts to combat fraud by failing to provide information on criminal investigations in time.
The West Midlands constabulary has admitted that owing to "staff limitations" it will take as long as seven months to provide information requested by insurers and loss adjusters on reported crimes. Such reports are often requested when fraud is suspected.
The delay flies in the face of an agreement made between the ABI and the Association of Chief Police Officers (ACPO), which sets time limits of up to 20 days for the provision of the reports (see box).
The West Midlands police says in its defence that it has received a "dramatic increase in the number of applications from insurance companies, and that insurance companies often complete initial applications incorrectly".
It adds that the department "has requested and is awaiting an internal review of [its] resourcing".
Nonetheless, loss adjusters say that the West Midlands' failure to provide the information on time is making it more difficult for the insurance industry to spot fraudsters.
Philip Swift, director of loss adjuster Claims Management & Adjusting (CMA), which specialises in vehicle claims, says: "We need to have access to the reports - not getting anything for seven months is too long.
"[The police] should not take seven months to deal with a claim - there are service standards. We are fighting crime with our hands behind our backs."
Swift adds: "It is more difficult to identify and resist fraudulent claims as we are not
getting the police reports [as a result of the backlog]. We can identify potentially fraudulent claims, but we are not getting the nails in the coffin."
The situation highlights one of the major problems for the insurance industry when it comes to combating fraud: the police, in general, are not that interested in putting resources into investigating and prosecuting insurance fraudsters.
The reason for this is that prosecuting insurance fraud is not a key performance indicator for the police, so putting resources into investigating fraud allegations is not worthwhile.
Swift says: "One constabulary has even said it will not investigate insurance fraud. Some forces may be frightened of the agreement [between the ABI and ACPO] because it leads to allegations of fraud being submitted which are labour-intensive to investigate."
However, not all police forces are performing badly. Swift describes the Metropolitan Police as "good".
He says: "If we have grounds to suspect fraud we get a copy of the crime report [from the Metropolitan Police]. This has proved excellent, allowing us to withdraw for claims where necessary."
Cheshire Police is "prompt" at releasing information, according to Swift.
Kent Police also stands out for its work on vehicle crime. It launched a £750,000 project in 2000 called Operation Igneous, which seeks to investigate in detail allegations of car crime.
Swift says: "Igneous is good. Kent Police is achieving crime reduction and has been successful in identifying fraudulent claims."
The problem for the insurance industry is that initiatives such as Operation Igneous are exceptional. Swift says: "Most constabularies don't investigate crimes - they just collate the reports. Fraud investigating officers have been moved to fingerprint and DNA [in order to combat terrorism and other more serious crimes]."
So even when police reports are released under the ABI/ACPO agreement, the information contained within them is often not that useful.
The ABI is aware of the problems that insurers and loss adjusters are having in relating to the provision of crime reports, and says it will be discussing the issue with the police later in the year.
ProsecutionABI head of financial crime prevention Chris Hannant says: "The prosecution of fraudsters should be a key performance indicator for the police so they get recognition for it and so they can put resources into it.
"The ABI will be talking to enforcement authorities in the autumn."
One area for discussion, says Hannant, will be how to manage the flows of data between the insurance industry and the police, particularly as insurers gain more information on fraud through the ABI's new fraud database.
"We will be discussing with the police how we can benefit from this data mining exercise," he says. "We want to find ways to make life more difficult for the fraudsters. We will have a new tool [the fraud database] but how do we best use it?"
Ultimately, the fundamental problem to be addressed is how to deter people from committing insurance fraud. If the police are not interesting in investigating the crime this does nothing to discourage the fraudster.
"If you don't deter, then fraud will increase. At the moment there is no deterrence," says Swift. IT
Information exchange - what was agreed
In 2002 the ABI and the Association of Chief Police Officers came to an agreement on the provision of information on property crime to loss adjusters and insurers.
Under the agreement, insurers and loss adjusters can request information from police forces where they need further information to validate a claim or where they suspect fraud.
A fee of £75 is chargeable to cover the police force's administrative costs, although where fraud is suspected there is no charge.
The insurer or loss adjuster must state the specific reasons for requesting the information and what information is required.
The police will endeavour to provide the information within 20 days.