Fraud detection ramps up a gear

The Insurance Fraud Bureau, the cross-industry group set up to tackle organised insurance fraud, is now achieving significant results.

In the latest of a series of raids and arrests by the police in the wake of IFB investigations, 40 people were charged by the Bedfordshire Police after they uncovered an alleged £5.3m conspiracy to defraud insurance companies. The scam dates back to 2006 and involved fraudsters causing collisions between themselves and innocent motorists that then had to claim on their insurance, even though they were not at fault. As a result of Operation Exhort, 26 of the defendants have appeared in Luton Magistrates Court.

In Operation Utah meanwhile, which looked at uninsured driving, over 150 vehicles were seized and 58 arrests made through the intelligent use of number plate recognition technology. In 2007, 150,000 uninsured vehicles were crushed following their seizures by police.

Outside motor, there was another significant prosecution in May when Liverpool Crown Court sentenced David Cairns to nine months for alleging falsely that he had broken his ankle in a pothole in the road, for which he claimed over £9,000 compensation.

Technology is playing an increasing role in anti-fraud techniques and one supplier, Absolute, said in June that it had enhanced its cognitive interviewing technique, which it states can yield up to a 400% return for its insurer clients: the company developed Flatline to identify fraudsters through cognitive interviewing of claimaints; the system monitors callers' language use and measures memory recall. It is used predominantly for motor claims and by insurers such as Equity.

Absolute's technical director, Gabrielle Stewart, said that the process was designed to identify if a claimant was 'flatlining' by assessing whether or not they had an authentic connection to the claim event. Stewart insisted that the technique is compliant with the Financial Services Authority's Treating Customers' Fairly principle.

Another prevalent issue for insurers and brokers is identity theft, with the FSA having warned insurers to change their attitude to data security. Brokers also have a major role to play in advising their clients in this area, especially considering that over a million employees have admitted to losing confidential personal information on laptops in a YouGov survey on behalf of Navigant Consulting. Brokers can help their clients by ensuring businesses have sufficient insurance cover and that sufficient protocols are in place with regard to the Data Protection Act.

Paul Jacobs, marketing manager at DAS Legal Expenses, said that people had begun to take the Act for granted as it was now 10 yerars old but that attitudes were changing as a result of several high-profile incidents.

Another growing area in fraud, according to CIFAS - the UK's fraud prevention service - is so-called 'facility-takeover' fraud, which involves operating an account or policy based on illegally secured details.

As long as there is insurance there will be fraud, though at least the industry is taking a more concerted approach to this issue. Brokers need to ensure that they play their part.

USEFUL SOURCES OF INFORMATION

- Insurance Fraud Bureau Cheatline - 0800 328 2550

- Insurance Fraud Bureau - insurancefraudbureau.org

- Insurance Fraud Investigators Group - ifig.org

- CIFAS - cifas.org.uk

The Information Commissioner also provides a Data Protection Guide for Organisations at ico.gov.uk.