Whilst awareness of insurance fraud has undoubtedly increased in recent years and detection has become more effective, the fact that the problem still exists on such a large scale suggests that there remains the lack of a clear and effective deterrent. However, the recent consultation from the Sentencing Council on Fraud, Bribery and Money Laundering Offences Guidelines has provided an opportunity to make positive strides towards enhancing the deterrent effect of the sanctions available in the criminal courts.
Elaine Ibbotson, Partner and Director of Complex Fraud at Keoghs, believes that the recent consultation presents a welcome opportunity to examine the characteristics of fraud offences and where they impact individuals, businesses and society as a whole.
Elaine coordinated Keoghs’ response to the consultation, gathering views from a number of our experts. She commented: “Insurance fraud has some unique features which result in a wider and more far-reaching impact than many other offences considered within the consultation. This is an excellent opportunity to evaluate the harm caused by insurance fraud and to raise awareness of its extended sphere of damage and its subsequent cost to society. The aim of course is to ensure the punishment fits the crime and the starting point must be a clear understanding of who, how and where insurance fraud hits and where necessary to distinguish it from other fraud offences under consideration.”
Keoghs’ response to the consultation drew upon some of our own experiences of sentencing in insurance fraud offences and concluded that there were some aspects of the guidelines that did require amendment. The suggestions put forward were aimed at ensuring all relevant factors and features of an offence were adequately considered in the sentencing process.
We also focused on the impact of insurance fraud; something that should not be underestimated. Whilst the cost of detected insurance fraud is scandalous (£1.1bn in 2012 according to the ABI), the wider implications of a fraudulent incident can often be overlooked. The harm caused by a fraudulent insurance claim spans much further than just the insurers’ indemnity spend; innocent victims and valuable emergency services are amongst those who fall victim to the crimes committed.
Elaine expands, “It is widely reported that the cost of insurance fraud is ultimately borne by the customers of insurance companies, and given that almost every adult in the country will require and pay for insurance, this impacts almost everyone. There is also a price the public have to pay through the misuse of emergency and other public services.
“In the classic scenario of a fraudulent motor insurance claim, there is likely to have been a report of a collision between vehicles and to add credence to this account, many offenders will call the Police to the scene of what may well be a staged collision.
“Similarly, where the intended fraud is to secure personal injury compensation, fabricated injuries are often presented to medical professionals whether it be paramedics called to the scene of a supposed road traffic accident, hospital A&E departments or GP surgeries. It is common practice for those seeking compensation for personal injuries to be encouraged by their legal representatives to ensure there is some record of the purported injury within the person’s medical records. As such there is a significant drain on the resources of paramedics, hospitals and GPs who become drawn into the process of providing evidence to unwittingly assist the offender.“
Whilst this wider impact is not likely to be given any particular consideration by the offender in their commission of the offence, the extent of that wider harm is an issue which we believe needs to be a key feature in the sentencing guidelines applicable to fraud offences.
In addition, although not an area covered directly by the consultation, the issue of credit for guilty pleas was another subject we were keen to highlight. Our response pointed out that whilst the sentencing ranges can be seen as appropriate, there are varying views amongst the insurance industry regarding whether the punishment for insurance fraud offences is sufficient. Elaine concludes: “Whilst we would all want to see good headlines about custodial sentences, we need to realise that this will not happen in all cases, and under the current guidelines it will remain the exception rather than the norm. However, we need to decide what ‘good’ looks like when it comes to a prosecution as even a lesser sentence can have broader implications to fraudsters and so sometimes the lack of a custodial sentence isn’t necessarily a bad result.”
We await the response from the Sentencing Council following the consultation and will provide an update accordingly.
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