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Insurance Fraud Taskforce - the fight goes on…
The government’s Insurance Fraud Taskforce was established to help the ongoing battle against insurance fraud and published its first interim report in March 2015. Following publication, the Taskforce invited interested parties to respond to a series of questions for consideration arising out of their report.
The Taskforce’s remit is to explore the opportunities for further reform to address the ongoing problem of insurance fraud and interested parties were invited to put forward their views and ideas in relation to current and prospective counter fraud initiatives.
The Taskforce’s consultation comes at an interesting time, with the Jackson reforms and changes implemented through the LASPO Act 2013 now bedded-in and the latest fundamental dishonesty weapon provided by s.57 Criminal Justice & Courts Act 2015 ready and available for use. It is a good time to take stock and consider the shape of the current landscape and assess where best to focus future initiatives.
Keoghs have provided a response to the Taskforce based upon our experience within the legal process and hopefully the Taskforce will have a wide range of perspectives to digest before formulating their proposals. The questions posed by the Taskforce covered topics such as how fraud is measured, how the UK compares with other countries, factors which encourage or deter fraudulent behaviour, as well as seeking feedback on the previous reforms and ideas for future changes. Our response focused on the following key areas:
1. A period of change
Preparing the response provided an opportunity to reflect on how far things have evolved in the fight against fraud in recent years. The most obvious changes have been in relation to civil litigation costs and insurers are now seeing the fundamental dishonesty provisions come in to play on a more regular basis. In terms of criminal sanctions, IFED have ensured that the prosecutions for insurance fraud offences have been publicised wherever possible and several insurers have undertaken successful prosecutions for contempt of court.
It is important to remember of course that as changes are implemented in the claims process, those trying to cheat the system will adapt their methods accordingly. We have highlighted to the Taskforce some of the trends we have seen develop in motor insurance and beyond; examples include the growth of late notification motor PI claims, ‘layering’ through spurious rehab claims and an increase in the aggressive ‘claims farming’ of industrial disease claims.
2. A work in progress
Great strides have been made in identifying fraud and improvements in data-sharing processes have clearly contributed to this. There is, of course, still plenty of room for improvement and the key stakeholders will need to continue to work together to get the best out of the counter-fraud initiatives and organisations operating across the industry.
Organisations such as the IFB and IFED emerged in response to a recognition that the industry needs to work together in the collective fight against fraud and this collaborative approach will be crucial to the success of future initiatives such as those outlined in the IFB’s strategic plan.
Perhaps the next step is to look for ways to fine-tune existing initiatives and make the most of the sanctions already available?
The insurance industry can point to numerous instances of convictions in the criminal courts for fraud offences and for contempt of court, but there remains a concern that these sanctions are too slow and costly to pursue on a wider scale. Perhaps a more streamlined process for contempt of court proceedings would enhance the effectiveness of this existing sanction and encourage more insurers to undertake criminal proceedings?
The underlying principle behind all of the reforms to date is the need to ensure that there is a clear and powerful message that insurance fraud is taken seriously.
The Taskforce has raised the question of the public’s perception of insurance fraud and whilst those involved in the claims process can see the wide ranging impact of fraud, there remains a lack of public awareness of the extent to which the NHS and emergency services can become caught up and abused in the pursuit of fraudulent insurance claims. Keoghs would be interested to see further exploration of the impact on such publicly funded bodies; as this is a key part of the problem it should form part of the approach to looking for solutions in the future.
3. Looking to the future
Measuring the scale of insurance fraud is difficult and there is an inevitable time lag in the data needed to assess the problem. Whilst we have become more comfortable with the implications of the costs reforms and how and where we can apply fundamental dishonesty arguments, the true impact of this new regime cannot properly be determined until the data is available for the relevant period. It may be that the ABI statistics produced over the next 2-3 years will be needed before any meaningful analysis can be undertaken.
It is certainly positive to see the Taskforce engaging with those involved in the insurance sector to gather ideas. We await with interest the output from the Taskforce and look forward to seeing their ideas for future changes taking shape. It will be important to monitor the impact of previous reforms and in particular whether they have had the desired effect, before implementing further significant changes. Reducing the cost of insurance fraud is clearly an important part of the battle, but reducing the incidence of fraudulent claims will be the real indicator of success.