How car insurance fraudsters are costing you a fortune
CFM Group, the brokers behind the Insuremyhouse.ie, Insuremycars.ie and Coverinaclick.ie brands, say they have invested heavily in anti-fraud measures to stop fraud at inception rather than at claims stage.
The insurance experts say that not letting fraudsters get a foot in the door is the best way of stamping out the criminal behaviour that is driving up the cost of motor insurance for everyone.
Gerry Carter, a retired Garda and now Anti-Fraud & Claims Manager at CFM Group explained their approach: “Prevention is better than cure when it comes to insurance fraud. While it’s important to comprehensively investigate fraudulent claims, we would argue that it’s even more important to investigate fraudulent applications – if a person doesn’t make it past the application stage, they will never have a policy on which to claim."
"As we reduce and eliminate the number of potential fraudsters being offered a premium, the insurers we deal with are prepared to recognise this with lower premiums for the rest of our clients."
"One in twenty applications will be referred to the fraud unit - a small percentage of these will require further disclosures and a smaller, but important, percentage will be denied cover entirely. While the numbers might seem small, they can make a big difference in the claims courts.”
CFM Group have taken a two-pronged approach to fraud detection and inception: They have created a “red-flag and points reporting system” whereby not only facts are cross-checked, but comments made by policy-seekers are assessed too. Points are awarded for a series of “tick-box” criteria and, if an applicant reaches a certain points ceiling, then a red flag is raised and the application will be placed on ‘amber review’ and referred to the anti-fraud detection unit.
The company has developed a Continuing Professional Development (CPD) accredited, Insurance Institute of Ireland-approved, anti-fraud training course for staff, both of the Group and of other organisations. CFM have outlined some of the more common fraudulent practices they come across on a weekly basis:
Forged documentation – experts at CFM report that No Claims Discounts (NCB) certs in particular are often forged and are often used by people who’ve been involved in previous claims that they’d prefer not to disclose.
Gerry advised, “We come across forgeries – they vary in standards – some are very amateur, but others are more sophisticated, and you can tell they have been created by professionals. Many of these fraudsters sell the documents to the general public – however, it’s the motorist themselves that will get in trouble if detected."
‘Fronting’ – Mr. Carter explained, “This was traditionally seen with parents getting insured as the main driver on their son or daughter’s car to secure a lower premium. Often the parents are genuinely unaware that this is in itself fraud, and that if it is uncovered by an insurer, they can be refused cover or declined a subsequent claim. While we still come across this from time to time, it’s not as prevalent as before. However, what is more concerning is that it is a practice often used by known criminals, whereby the criminal will use someone else to insure themselves as the primary named driver on a vehicle and they then get added to the policy."
CFM contend that everyone in the insurance industry has a role to play in tackling fraudulent claims and that if the practice can be eradicated then this will reduce the cost of claims to insurers, in turn driving down the premiums paid by consumers.
The group are reporting plans to continue to invest heavily in their in-house anti-fraud unit, as they say significant investment in the last 5 years has heralded very strong results in improving the detection of fraudulent behaviour. The online brokers say that their end-goal is to weed out fraudulent applicants which will ultimately bring down the cost of car insurance for their customers
Mr. Carter concluded: “There is a small, but arguably growing, cohort of professional fraudster in Ireland that is becoming increasingly adept at staged fraudulent insurance claims. The simple fact is that the more fraudulent claims there are, the more insurers will be forced to increase premiums for everyone to recoup losses. The investment of time, money and expertise are all needed if we are to combat this escalating problem."