FRAUD TRENDS & DEVELOPMENTS. CII Regional Market Forum June Andrew London Associate

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2 FRAUD TRENDS & DEVELOPMENTS CII Regional Market Forum June 2014 Andrew London Associate

3 Agenda I Extent of the Problem: Some facts & figures II Industry initiatives III Fraud trends / challenges IV Courts V - Discussion / Questions

4 EXTENT OF THE PROBLEM Extent of the Problem ABI s 2012 figures: 15 fraudulent claims discovered every hour 1.1 Billion detected fraud/year 2 Billion + undetected Potential 50 added to customers premiums

5 Extent of Problem cont. New ABI 2013 figures hot off the press: Detected fraudulent claims rose to record 1.3 Billion or 3.5 million every day (a rise of 18% in value although small fall in incidents - 118,500 bogus/exaggerated insurance claims & average fraud value of 10,813) Over 2000 dishonest claims exposed per week Since 2007 value of dishonest claims has more than doubled with detected claims up 30% Why?

6 Extent of Problem cont. Extent of the Problem Equifax Yougov Poll November 2013: 67% of respondents have never been less than truthful on insurance application 87% say never committed insurance fraud 19% aged between 25-34: slightly acceptable to exaggerate compared to 7% of over 55 year olds

7 Extent of Problem cont. Extent of the Problem HD Claims and Fraud Index: Since 2009 most rapid rise in fraudulent claims is amongst under 28 year olds A small but gradual year on year increase in females featured in fraudulent claims Spread of fraudulent claims throughout UK Average repeat offender rate for motor claims fraud is 13.3% Link in repeat offenders with different types of fraud

8 Extent of Problem cont. There are industry initiatives Are these meeting the challenge? What are the threats and trends that are emerging? Are the Courts helping?

9 II INDUSTRY INITIATIVES IFB Profile, Cheatline IFED Profile & publicity Should it be enlarged? IFR Deterrence DVLA ABI umbrella body statistics, publicity & advertisements Media generally Data Sharing Protocol? But: Proposed European legislation Whiplash Reforms

10 III FRAUD TRENDS Like a hit parade depending on data that we hold Some come and go The organised fraudster also has a bottom line It s a business operation Opportunism as a one off: more prevalent in First Party arena

11 Fraud Trends cont. 1. Ghost Broking & applications Fraud Attacking the vulnerable Mainly through mobile numbers Non existent policy holders Cross matching Hill Dickinson Netfoil and CIFAS since 09/2012: misuse of facility confirmed fraud risk application fraud identity fraud + a few of asset conversion, facility takeover fraud, other false insurance claims Often the platform for a fraudulent claim of one sort or other

12 Fraud Trends cont. 2. Late notification of claims Still prevalent Stock clearance & resurrection of claims Continuance of incentive advertising & text messages No firm instructions Claims of under-compensation Recently: incomplete information re Defendant on CNF, alteration of accident date to fall within limitation & encouragement of pre-med offers

13 Fraud Trends cont. 3. Operation Dino the holistic fraud operation Utilising one premises for an all-encompassing operation Recovery, storage, accident hot spot, repairs all within manageable locality Computers and insurance documentation Family business CCTV [!]

14 Fraud Trends cont. 4. Short Term Rental exposure HD pooled rental data from a number of rental companies Firm evidence of cross-hire provider claims fraud Matches to existing high risk operations and professional enablers Links to other fraud types e.g. ghost broking Heat mapping showed significant clusters Significant proportion of current book considered high risk (360 Claimants) Matches across the data more than the sum of parts [similar fact claims, links to undisclosed risk, new high risk addresses, aliases and duplication]

15 Fraud Trends cont. 5. Credit hire fraud Still prevalent Is it more sophisticated? Arguable Less high value claims? Under the radar? Still a number of non-hires Fly by night organisations

16 Fraud Trends cont. 6. Credit hire vehicle theft Legitimate credit hire companies are now the victims of fraud Use of telematics data to counter Evidence of co-operation between credit hire companies and IFED as well as some organisations Eastern European links

17 Fraud Trends cont. 7. Buses A money-spinner Typical slam on fodder Technology is key Opportunistic claims for bent metal hit whilst parked

18 Fraud Trends cont. 8. Telematics and technology Key component in detecting fraud BUT: fraudsters always seeking to outsmart technological advances Vehicle Theft by laptop

19 Fraud Trends cont. 9. Cross industry fraud A fraudster is always a fraudster New opportunities Finance, lifestyle, health, travel, liability Fraud Rings / Operations are still prevalent but now there are signs of rings in other fraud areas

20 Fraud Trends cont. 10. The Scottish Connection Increased fraud claims Links with Blackpool and traditional hotspots Claims often feature three locations Intelligence links are less direct Scottish/English Jurisdiction

21 Fraud Trends cont. 11. Elimination of drug debt May account for the increase in younger fraudsters Organised criminals Links with body shops/recovery agents/scrapyards No fraud fingerprint High occupancy, recent inception, bank details

22 IV THE COURTS Effect of Jackson reforms Liability claims and the Portal Hussain v- Amin (Defences) Fighting back (Sanctions): - Fairclough v- Summers - Fari - Airbus & QBE v- Roberts - Plana

23 The Courts cont. Non Party costs orders QOCS CPR 44 Problem of Discontinuances & costs orders Exceptions without court permission CPR Exceptions with court permission CPR Fundamental Dishonesty What does it mean?

24 The Courts cont. - Gosling v- Screwfix & Anor (2014, Cambridge CC) Claimant s conduct was dishonest and designed both to deceive and give a false impression Dishonesty crucial to around half the value of the claim, was on any view sufficient to be characterised as fundamental

25 Discussion Points How do you perceive the threat? Is the industry / Parliament doing enough? Are the Courts doing enough?

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