Health check on Fraud Management within Insurance sector

1
Health check on Fraud Management within Insurance
sector
CILA Presentation by Anti-Fraud SIG
John Freeman 30th October 2007
2
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

3
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

4
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?
5
Public Surveys

• ABI Public surveys
• Focus Group sessions
• Commercial Fraud Survey
• Host of Industry Surveys

6
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

7
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.

8
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
9
Increase professionalism of investigators
FSA Consumer protection Competency
SIA Integrity Probity Competency
CILA SIG Charter
10
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