UK Insurance Fraud has been in the headlines for many years. Crash for Cash which seems to be announced as a new form of fraud every 5 years or so, is a very real and costly type of fraud. The Insurance Industry has been very much at the lead of tackling fraud and hitting the headlines with successes. So, not too much too worry about if you aren’t involved in insurance?
Please think again. Keep reading, it will soon be relevant to you and your working day.
Not paying fraudsters drove insurer’s actions during the 20th century. Then came regulation and phenomenal progress in terms of policy, strategy and innovation for insurers and their agents. Fraud teams, fraud partners, data mining, data bases, and benchmark performance MI. Great initiatives like the Insurance Fraud Bureau and a dedicated team of police officers paid for by the insurance industry, the Insurance Fraud Enforcement department.
However, their own figures say about £1 billion is detected, but about £2billion remains undetected. So, 2 out of 3 times the fraudster gets away with it.
Better than a few years ago but work still needs to be done.
Question 1. Where does that money go?
Well, there are sports cars, luxury homes and the usual trappings, but the majority gets reinvested back into fraud, crime, and terrorism. Not just insurance fraud, but every type of fraud where corruption, false identities, false addresses, and deception can be used to part people with their money.
Poor insurers and banks I hear you say? Sadly, you need to look closer to home. Insurers £3billion is only a part of the £123 billion lost to fraud last year in UK.
Question 2. How does this affect you?
If you and your business have money, then the fraudsters are constantly working out how to part you from it. There were 2.5 million frauds in the UK last year according to the Office of National Statistics. Fraud is now the commonest crime in UK. and running at £123 billion per annum.
No-one is immune. A quick check of the UK press will show that victims include the police
They will also show that perpetrators include those charged with protecting a company from fraud
They will show you that trusted employees commit fraud too
Then there are the many businesses are targeted by fraudsters and that it is a highly lucrative business
Is it about your business yet? Is it depressing? Let’s stay positive and go for enlightening.
Data. How many people do you employ? Do you have their bank account details? What about your suppliers? What about your customers? Do you have their bank account details? Well that’s information criminals will pay for. Especially if you have their three-digit CVV security code. However other data is also useful to the criminals. Insurers and claims managers have seen that just knowing someone has been involved in an accident is useful information, with a price that criminals will pay for.
The criminals will also pay for information where people have had lump sum payments. So that would include loans, pensions, inheritance, sold their car, sold their house etc. They can then target them for investment scams and boiler room scams.
Well I hope some decision makers have stayed with this article, because it really needs your attention.
Question 3. Why should you care?
Well you need to care whether you are a top 500 company, or an SME.
Rightly or wrongly companies are run from the top. That is where the culture comes from. The fraudsters’ biggest hurdle is company culture. What? I hear you say? Surely it is about our computer systems and process?
No. They are vitally important, but a poor culture will result in lack of care, policies that are paper documents rather than reality, and people who can be persuaded to bypass the process.
Did Tesco Bank have poor process when £2.5 million went out of customers’ bank accounts? I doubt it. I won’t question their culture, but something went wrong.
To answer question 3 above:
According to the Association of Certified Fraud Examiners who are a globally recognised body approximately 5% of turnover is lost to fraud. That is for all businesses not just financial institutions and not just in UK. You can cut that by half or more if you have the right systems and culture in place. Imagine being able to put 5% of your turnover back into your profit and loss?
Your reputation, brand and business, are at also risk if you or your customers are victims of fraud.
If you lose data or breach regulations any money or information lost may pale into insignificance compared to the fines or sanctions which may be imposed.
If you have a man or woman whose name you can’t quite recall looking after your compliance and financial crime, then you need to get to know them better. If they are telling you everything is under control, then maybe you need to probe further? You could also consider bringing in a second pair of eyes and ears to help them protect you and your business.
If you have a weak link in your chain, then the criminals will find and work around that link. You must be able to identify breaches. You must be able to investigate them efficiently. You also need to have an effective corrective action plan that takes the learning from the breaches.
Prevent, detect, contain and continuously improve. Do that well and you can concentrate on your main purpose which is to run your business and be competitive. That, plus a huge opportunity to improve your profitability, reduce your risk and outdo the competition.
Time for you to go for it? We can help.