The industry needs more determination to beat the professional fraudsters, says Stuart Smith
Recent efforts in targeting suspect insurance claims have meant that novice fraudsters must beware. Meanwhile, serial fraudsters can to a certain extent breathe a sigh of relief - for now, anyway.
For many insurance fraud rookies, getting around the system is now a daunting task. From proposal documents referring to fraud databases to insurers sharing information and declarations of intent to prosecute offenders, the novice fraudster has a mountain of hurdles to overcome. For those willing to take the risk there is the lie detector (or voice stress analysis) and cognitive interviewing ready to identify the more determined claimant. The claims that make up the majority are receiving detailed attention and not before time.
The efforts of the industry aren't restricted to combating claims from policyholders. Third party claims are also facing new and improved industry measures.
There is however a danger of taking an eye off the ball when it comes to serial fraudsters, such as those arranging multiple high value claims involving identity fraud.
These fraudsters won't be deterred by the wordings in proposal documentation, voice stress analysis or improved database access. These fraudsters are making large sums and we need to ensure that while great progress is made with regard to other types of fraudulent claims, sufficient resources are put into investigating cases where there are substantial claims being made by the same groups of fraudsters time and again.
So how do we approach this problem effectively? There are a number of ongoing initiatives and investigations. However, as always, fraudsters are adjusting their position, and the insurance industry needs to be equally adaptable in looking at fresh ways to complement the steps already taken.
In Ireland a fraud hotline was established in March 2003 where the fraud problem is said to be costing the Irish insurance industry £66.5m a year - a small percentage of the cost in the UK. The results from that experiment are significant.
While quantification of savings is difficult to ascertain, it is clear that the hotline is a great tool in identifying professional fraudsters. Perhaps most importantly there is a clear recognisable way for informants to give relevant information to the interested parties. A similar scheme in the UK could be a significant step forward.
A lack of quality evidence is hampering successful criminal prosecution. However, further use of undercover investigators in order to acquire high quality intelligence on criminal gangs and claims management organisations would make such prosecutions more likely.
Close relationships with criminal agencies such as the National Crime Intelligence Service are essential in tackling organised fraud, not only in terms of investigation but also in order to improve the present lack of understanding and appreciation of the problem the industry faces.
There are of course well known difficulties in dealing with government agencies. But we are seeing an improvement, particularly with regards to a number of major investigations into serious road traffic fraud at the moment.
No initiative on its own will address the objective of bringing about significantly reduced organised fraud, but it is a challenge that the industry is ready for. However, it will require even more innovation, determination and initiative than that used successfully to date in tackling more novice fraudsters.