New legalisation in the US, in particular the Patriot Act (2001) which was quickly introduced after the 11 September attacks to allow federal agencies to screen suspicious business and personal accounts, will help insurers and the police fight money-laundering in the industry, said Joe Cohen, director of insurance fraud investigation division for the Kentucky Department of Insurance.

Fraudulent claims in the US have been valued at 10% of all premiums, roughly $79bn (£49bn) a year, Cohen told the IIR's Insurance Fraud and Detection Conference in London this week. He said that the figure could be higher as there is no real statistical data of the true cost.

"You can talk to one group and they say it is lower while others say it is way above the 10% mark," he said.

He said it was incumbent on insurance companies to have effective anti-fraud strategies because insurance was the main area for police investigations into fraud.

Underwriters and agents can ensure that risks are appropriate. Potential insureds can verify applications and have their identities checked. Investigation of a potential risk is appropriate, Cohen said.

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