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£16 Billion Investigation
ORGANISED fraud is costing Britain £16BILLION a year - £650 for every family in the land - a report by the Association of British Insurers reveals.
Insurance scams alone cost £1.5bn a year adding five per cent - £50 or more - to the premiums we pay for home, car, travel and health insurance. The study reveals shocking examples of the police and judicial system failing to prosecute fraudsters:
The Crown Prosecution Service refused to prosecute one fraudster who was forced to hand back £250,000 for a phoney personal injury claim after a key witness admitted perjury during civil proceedings.
A gang that staged more than 400 car accidents around a major city escaped justice.
Every incident involved a driver "inducing" an accident with an innocent motorist.
The insurers gave the evidence to the police together with information showing that the gang were using the money they made to fund drugtrafficking, prostitution and gun-running. But the police refused to prosecute unless the insurers footed the bill.
Its not just the money: arson is also endangering lives while the cost of commercial insurance fraud inflates the prices we pay in the shops. ABI director Nick Starling says that losses have doubled in five years with criminal gangs making as much money from stings as from drugs. "The extent of fraud is underestimated and its detection underresourced. Yet its impact is very real and serious," he said. The group has submitted its report to a government fraud review calling for more money and manpower to be given to the police to tackle fraud. ABI spokesman Malcolm Tarling said: "Only a handful of police forces have their own fraud squad and fraud is given too-low a priority because forces don't have the resources to tackle it properly."
Insurers are setting up an independent Insurance Fraud Bureau this year to collect evidence to give to the authorities. Among those on its steering group is Mihir Mandya, fraud manager at Allianz Cornhill. He told us: "We need a co-ordinated response to organised crime and we will be using the latest technology to detect and investigate fraud.
"Criminals have found fraud a soft target. They might get seven years for stealing £500 in an armed robbery. If they commit major fraud there is a low risk of it being detected or investigated properly."
"Even if convicted they are more likely to be sentenced to community service than sent to jail."
Scott Clayton, claims, fraud and investigations manager at Zurich Insurance, told us: "It's vital that everyone is aware of how insurance fraud can affect each and every one of us, including innocent policyholders.
"Fraudsters don't think twice about claiming for fictitious damage, with some also claiming for injuries. This is evident with staged car accidents which have increased considerably over the last few years. These accidents are staged to make the fraudster look like an innocent victim, with many going so far as to claim for non-existent passengers. We have even seen instances of 'seats' in vehicles being offered for sale with the opportunity of claiming for personal injury. From experience, the police are reluctant to take on cases where investigations are incomplete. From an insurer's perspective it's our responsibility to leave no stone unturned so we can provide the authorities with all the information and hard evidence. This means that instead of providing the police with the bare bones, we're providing all they need to pursue prosecution. Greater detection and harsher punishments are required to reduce the level of fraudulent activity and the overall cost to the British public."
According to the ABI, copy-cat induced accident fraud rings are now emerging in cities across the UK. Some police forces won't prosecute fraudsters unless the amount of money involved is large. Whilst it would be an impossible drain on police resources to prosecute every fraudster the ABI says the police would benefit from targeting some lower-value frauds.
West Yorkshire police, for example, found they were wasting hundreds of hours because fraudsters were filing false burglary and robbery reports so they could claim on their insurance. And Northumbria Police estimates that one in 10 robbery reports are fictitious.
"Cracking down on low-level fraudsters would have knock-on benefits by reducing wasted police time," says the ABI.
WAGING war on the fraudsters is good news for honest policy - holders because it should help keep down the cost of insurance. However cracking down on fraudulent claims will mean all genuine claims may face closer scrutiny. You can help insurers and yourself to get claims settled promptly. Keep receipts of all valuables. And if you're involved in a car accident and you suspect it was staged, do report your suspicions to your insurer.
Source: The Mirror |
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