Fraud rings and the spiralling compensation culture are the most challenging tasks for insurers, who must tighten their grip on the claims system, says Alan Cleary

My recent appointment at Brownsword has been an eye-opener for me. I have worked with many companies over the years, but this investigation firm is one of the most customer focused operations I have ever dealt with.

It is refreshing. Brownsword has an outstanding team, offering high quality in practice and growing fast. The atmosphere is dynamic and the operation itself is very 21st century in style and attitude.

This is an ideal atmosphere in which to face the challenges of 2003. If there is one new year resolution insurers should make, it is to raise their game in the context of identifying fraud.

It is the one glaring hole in the modern insurance company's armour. The industry must focus on updating its IT systems and work on better screening of claimants.

If you read the front page of this issue of Legal Report, you will understand that there has been a proliferation of sophisticated fraud rings in action over the past few years. Often the perpetrators are international criminals who are becoming more active in the UK.

And with the EU Directive on Insurance Mediation in 2004 bringing the UK market closer to Europe, insurers and brokers should be more aware of tightening their controls.

Today society is in the grip of what I call the "psychology of entitlement" and the compensation culture is beginning to spiral out of control. Much more effort needs to be made by insurers to subdue this growing culture.

This year may also see insurers shift away from the traditional panel structure. Competition among law firms is heating up and many who thought they would carry on working with a particular insurance client for life, may find themselves dropped this year for a rival.

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