Europe: an organised fraudster's paradise?

Combatting insurance fraud is a challenge high on the agenda of many UK insurers and it is widely accepted that a collaborative approach within the UK insurance industry is required. However, the insurance fraud epidemic isn’t restricted to the UK, and whilst compiling statistics on the problem is difficult due to countries measuring fraud in different ways, it is clear that the ‘value’ of insurance fraud throughout Europe is a significant sum*. With this in mind, is it time to develop a European approach to tackling insurance fraud?

At the CED international conference in Warsaw earlier in the year, Ruth Needham, Director of Fraud Rings, delivered a presentation on insurance fraud to over 60 insurers and brokers from across Europe. Ruth’s presentation on tackling organised insurance fraud would have been nothing new to the UK insurance fraud industry. However, the issues discussed such as the ability to investigate and be DPA compliant, the need for insurers to communicate with one another and their suppliers, the ability to join intelligence into evidence and the importance of constructive liaison with the Police were pertinent to all those attending – regardless of which country they represented.

During the day, speakers from as far apart as Russia and Italy, together with having issues specific to their own country, spoke about the same consistent problems encountered by the UK insurance industry. Concerns were also raised regarding the current economic climate which continues to put financial pressure on individuals; an issue that has often been blamed for the increase in fraudulent claims in the UK.

Borders open to abuse?

As the expansion of the European Union continues, so does the challenge of tracing individuals and vehicles involved in organised insurance fraud. The ability to travel through several borders, often without disruption, offers countless opportunities for fraudsters, including being able to claim for damage on vehicles in numerous jurisdictions.

Ruth specialises in combatting organised insurance fraud and can see the immediate benefits of having open dialect and connections with insurers in other European countries. She said: “Maintaining links with our counterparts in Europe is incredibly useful, especially when dealing with organised fraudsters. Since my return to the UK, I have been in regular contact with insurers from Poland, the Czech Republic and Germany. On three occasions we have identified vehicles which have been used in insurance claims in the UK and have then returned to Poland or the Czech Republic where claims for exactly the same damage have also been made.”

At present, data matching is not carried out on a European scale and so identifying cases such as those evidenced by Ruth are often based on luck and the tenacity of the claims handlers. However, when cases are identified, it can result in repudiations both within the UK and other countries therefore maximising the impact and disruption to organised fraud rings.

Ruth continues: “The freedom available makes the EU an organised fraudster’s paradise. There are countless times where I have been handling claims and have been faced with the problem of tracing the vehicles involved. Often being told that the third party vehicle cannot be found or the first defendant doesn’t reside at the address they provided.”

A representative of the Council of Bureaux (the MIB equivalent for Europe) also presented at the conference and discussed the issues facing them regarding abuse of the green card system. The lack of communication between members in relation to fraud meant it was open to exploitation. It appears that they too would benefit from a consistent approach to handling insurance fraud.

Future standards

Whilst an agreed approach to insurance fraud throughout Europe may not be on the cards for some time, there are other areas which are showing greater signs of reform. The handling of whiplash claims varies throughout Europe, with the scale of damages paid out ranging massively. However, Professor Duarte Nuno, President of the National Institute of Forensic Medicine in Portugal, told conference delegates that the European Union was working on a standard definition of whiplash that is hoped will be accepted across Europe. Even so, a lot more work and understanding is required, as unsurprisingly while some jurisdictions have immediately accepted the suggestions, others feel that it would be a contradiction of their own legal systems.

Ruth concludes: “Working towards a consistent approach will not be easy and there will be numerous hurdles to conquer. In the meantime, I would encourage members of the UK insurance industry to take the time to build the necessary relationships with our counter-fraud colleagues within the EU to assist with our long term aim of disrupting organised fraud.”

*ABI figures indicate over £1.1bn of detected insurance fraud in 2012 in the UK whilst Insurance Europe reported that in 2011 France recorded that €168m was not paid out to dishonest individuals and that Sweden detected €40m in insurance fraud. http://www.insuranceeurope.eu/uploads/Modules/Publications/fraud-booklet.pdf