Cross-sector fraud data checking could save millions for insurance industry

The insurance industry could save millions of pounds by comparing fraud information across its sectors after a recent data test carried out by Cifas and Hill Dickinson found significant links that could help reduce the impact of dishonest claims.

A report by Cifas, the not-for-profit fraud prevention service and Hill Dickinson, has unveiled the results of a cross sectoral data match between motor insurance fraud cases and those in retail, banking and telecommunications.

It shows 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 also 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.

32% of the claims studied 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.

In addition, 42% of matches were on activity indicative of money laundering, suggesting strong links between insurance fraud and serious organised crime. London, Manchester, Birmingham, Nottingham and Sheffield had the highest numbers of linked fraud networks, many of which were working across multiple locations.

The Cifas deputy chief executive, Mike Haley, said that the findings had 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 that the report had highlighted that financial services fraud was a volume-based enterprise.

“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.”

Mark Dugdale