Health check on Fraud Management within Insurance sector

CILA Presentation by Anti-Fraud SIG

John Freeman

30th October 2007

Fraud and the insurance industry Research results January 2001

Professor Alan Doig and Professor Michael Levi

Principle recommendations;

Establish common definitions for fraud measurement Formal protocols with the police Public surveys Requirement and scoping exercise, undertaken across industry databases Create Industry wide fraud resource Information sharing protocols Increase professionalism within the investigation arm of the insurance industry

Common definitions for fraud measurement

Response

ABI definitions agreed and data being reported

Three broad categories:

Fictitious losses, incidents or injuries Staged incidents Material misrepresentation or

exaggeration of losses or personal injury

Returns based on:

Proven insurance fraud Suspected insurance fraud

Formal protocols with the police

Response

ABI/ACPO Memorandums of understanding Version I & II

Improved communication channel

New fraud law will add weight?

Renewed focus but resource issue needs to be tackled?

Public Surveys

ABI Public surveys

Focus Group sessions

Commercial Fraud Survey

Host of Industry Surveys

User requirement and scoping exercise to be undertaken

ABI Polaris project

Objective to develop common standards and common data access protocols

Accessing CUE, MIAFTR,MID etc on one common platform

Streamlined and efficient use of technology to deliver industry data requirements

Create industry-wide fraud resource

Insurance Fraud Bureau

Focus on distributed claims fraud, through which organised criminals make multiple, fraudulent insurance claims across many insurers.

Detica under contract will apply a series of advanced, new data analysis techniques to detect patterns of fraudulent behaviour in huge volumes of claims data supplied to the IFB by UK insurers.

£3.4 Million contract will be run as a managed service, Detica to supply fraud intelligence on an ongoing basis to internal team of insurance fraud case managers.

Agree information sharing protocols

Insurance Fraud Investigators Group – committee role is to:

Manage the circulation of intelligence to IFIG Members

Consider revocation of a firm or individuals membership of IFIG where procedures are breached

National Intelligence Model provides:

Greater consistency of investigation across the UK

Allows more investigators to focus on solving priority problems and targeting the most active offenders thereby reducing exposure

Achieves greater compliance with human rights legislation and the Regulations of Investigation Powers Act (RIPA)

Informs the management of risk

Improves integration with partner agencies

Increase professionalism of investigators

FSA Consumer protectionCompetency

SIA IntegrityProbityCompetency

CILA SIGCharter

Conclusion

Substantial progress since original report in all areas

Need to do more in the market to publicise the fact

Must not become complacent

Challenging times ahead

Danger of compartmentalising strategy

Holistic solution must be the end objective