Cross-sector fraud data could unlock millions in additional insurance savings

Fraud data from other sectors can help insurers identify and tackle policy application and claims fraud, reducing the financial impact of insurance fraud on the industry and genuine customers, according to a new report from Cifas and Hill Dickinson, published today.

The report explains the results of a cross sectoral data match between motor insurance fraud cases and fraud cases from other sectors, such as retail, banking and telecommunications. It reveals complex networks of criminal activity and strong links between false claims on motor insurance and other fraudulent activity, such as money laundering. Data relating to the chronology of frauds has been uncovered, providing a more detailed insight into the behaviours of fraudsters.

The data matching exercise was between a sample set of confirmed fraud cases from Hill Dickinson’s Netfoil ACE database and confirmed fraud cases held on the Cifas National Fraud Database. In total, 196 of the Hill Dickinson cases matched on details within 347 Cifas National Fraud Database cases. The key findings were:

• 32% of false claims on motor insurance involved individuals who were also found to be involved in other types of fraudulent activity. The vast majority (82%) of matches were against cases in other sectors, showing the extent to which the same fraudsters are operating across different industries;
• 31% of the individuals involved in both insurance claim fraud and other forms of fraud committed the other fraud first, showing that the sharing of cross-sector data could have alerted insurance fraud investigators to the fraud risk at an early stage;
• 42% of matches were on activity indicative of money laundering, suggesting strong links between insurance fraud and serious organised crime.

The results also suggest that insurance fraudsters are operating across regions. Not only are some individuals involved in frauds at multiple addresses in the same region, many are linked to frauds in other cities. London, Manchester, Birmingham, Nottingham and Sheffield had the highest numbers of linked fraud networks.

The findings highlight the crucial role of intelligent data matching in fraud prevention. In some cases, fraudsters had deliberately used different names and addresses to evade detection but were identified purely through common contact details such as mobiles or emails.

Cifas Deputy Chief Executive Mike Haley said:
“These findings set insurance fraud into a much wider criminal context. The case studies unearthed by our research reveal vast networks of fraudulent activity. Intelligent use of cross-sector data can help insurers combat fraud and reduce the cost of insurance for honest customers.

“Fraudsters are some of the best collaborators out there – to combat them, fraud prevention professionals need to work ever more closely together and share intelligence wherever possible.”

Peter Oakes, Head of Fraud at Hill Dickinson said: 
“This research demonstrates that financial services fraud is a volume based enterprise and we know the fraudsters targeting the insurance industry are determined and prolific.  We are even beginning to see potential evidence of the franchising of fraud ring models.

“Cross-sector data sharing unquestionably assists organisations to prevent fraud at application and to better manage any existing fraud risk.  Hill Dickinson is committed to assisting insurers in their use of cross sector data and intelligence to strengthen counter fraud controls.” 

ENDS

Notes to editors

1. Given the number of matches found in this pilot study and the fact that the average loss from a single organised motor insurance claim case is approximately £20,000, it is evident that the insurance industry has the potential to save millions through increased cross-sector sharing.
    
2. The data matching exercise was between a sample set of 618 confirmed fraud cases related to 2,307 individuals from Hill Dickinson’s Netfoil ACE database, and more than two million confirmed fraud cases held on the Cifas National Fraud Database. In total, 196 of the Hill Dickinson cases matched on details within 347 Cifas National Fraud Database cases.
    

About Hill Dickinson

Hill Dickinson LLP is a leading and award-winning international commercial law firm with more than 1,250 people including 190 partners and legal directors, with offices in Liverpool, Manchester, London, Sheffield, Piraeus, Singapore, Hong Kong and Monaco. The firm delivers advice and strategic guidance spanning the full legal spectrum, from non-contentious advisory and transactional work to all forms of dispute resolution.

Hill Dickinson prides itself on fostering the strongest client relationships and adding value through innovation. The firm acts as a trusted adviser to businesses, organisations and individuals within a wide range of specialist market sectors: including transport and logistics and international trade, through to retail, insurance, marine, health, education, manufacturing, public sector and banking and financial services.

The firm work with the Community Foundation Network, to raise vital funds for a number of charities. For further information about the firm and its partners please visit www.hilldickinson.com
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About Cifas

Cifas aims to make the UK a safer place to do business. For more than 27 years, Cifas has worked to prevent fraud by enabling organisations in every sector to prevent fraud and protect the public through the sharing of confirmed fraud data.

Cifas is a not-for-profit organisation with over 300 members spanning the public and private sectors, including insurance, banking, grant giving, credit card, asset finance, online retail, telecommunications, vetting and contact centres. In 2014 alone, Cifas members prevented over £1 billion of avoidable fraud losses by using Cifas’ National Fraud Database, which records confirmed fraud cases. Cifas works closely with law enforcement and runs a number of insurance specific working parties and groups, regularly undertaking research to explore fraud links between different UK industries.

Cifas offers Protective Registration for individuals whose identities are at risk of being used fraudulently. In 2014, Cifas launched a new scheme called Protecting the Vulnerable. This service is offered free of charge to local authorities to protect those under the care of Court Deputies who are unable to access financial products and whose identities may be at risk.

Please contact Emma Smyth at Cifas on 0203 004 3627 or Anne Staunton for Hill Dickinson on 020 8661 2444.

Contact us at press@cifas.org.uk