Fraudulent claims being fuelled by the recession continues to be the top concern of the next 12 months for insurance fraud investigators.
According to research carried out by Ordnance Survey and the Insurance Fraud Investigators Group (IFIG), the UK’s leading insurance fraud investigators, 80% of those asked said an increase in fraud, fuelled by the recession was a major worry. Fraud investigators say fraudulent claims are already on the rise, with nearly four in five (79%) seeing an increase in fraudulent claims since the beginning of the year.
In light of this, insurers are increasing the number of measures they are taking against fraudulent claims. Fraudulent activities has moved up the organisational agenda for over two thirds (70%) of investigators and over 75% have seen increased investment in fraud detection within their organisation. This investment has been spent primarily on human resources (70%), combined with fraud detection systems (64%).
Phil Bird, Director, Insurance Fraud Bureau commented on the research. “Insurers invest £200 million plus per year in their anti-fraud staff and systems,” he said. “Those investments saved over £900 million in claims payments in 2011.” 83% of insurance fraud investigators use geographic information in their investigations with almost half (43%) using it to build up evidential cases for prosecution.
Geographic information can help to identify fraud hotspots and aid pattern analysis. It also helps to verify customer information; speed up surveying and is important for the process of building up evidence for prosecutions and detecting fraud at both claim and policy stages.
Sarah Adams, Financial Services Sector Manager at Ordnance Survey, said: “Fraud 2012 provides clear evidence that the industry takes this threat seriously, with increasing numbers of counter-fraud professionals using geographic data as an added tool in their armoury”.
Social media, such as Facebook, YouTube and Twitter, play an increasingly important role in bringing fraudsters to book. Investigators use social media postings to disprove a policyholder’s alleged injuries or to link apparently unrelated claimants in an induced collision. ‘Recent case law illustrates that the use of evidence from social media websites is increasingly being accepted by the courts as a legitimate way of proving fraud.’ Peter Oakes, Head of Fraud, Hill Dickinson. Motor insurance is the biggest area where fraudulent claims are being made, 10% increase since 2010 (79% in 2012 compared to 72% in 2010). Other areas where there has been an enormous jump in fraudulent claims include commercial motor, where 50% more investigators have seen an increase compared to 2010 as well as personal injury, with 20% more investigators (43% in 2010 compared to 53% in 2012) seeing an increase. Fraudulent claims range from inflated and exaggerated claims (83%), to completely false claims (75%) and serial claimants (55%).
Insurance fraud investigators (79%) also believe that aggregators and brokers need to do more to prevent fraud at policy inception, including undertaking more stringent checks, undertaking identity checks when signing up customers and enabling better information sharing. Glen Marr, Director of Fraud, 1st Central believes “Application fraud, which extends to ghost broking, remains the industry’s Achilles heel.”
Glen adds “The more data that can be collected and shared at application stage, the harder… [it will be] for fraudsters targeting the industry”.
Respondents identified data-sharing as a key weapon in the fight against fraud. Yet data-protection issues are seen as a block to effective data-sharing by 65% of respondents, with 63% also saying that there was a lack of understanding of the Data Protection Act 1998.
David Philips Chairman of IFIG, says: “Encouraging the industry to work collaboratively to combat fraud is a key goal for IFIG.