Hard times bite for Insurances fraud

Fake injuries, inflated car-repair bills and “fictitious” goods allegedly stolen in household thefts are among scams that insurance fraudsters perpetrate — and insurance fraud is rising again, largely because of the recession.

Admiral, the FTSE 100 insurer that runs Confused.com, became the latest group to warn that it had seen a marked increase in fraudulent claims, including ones by criminal gangs, in the first half of the year.

David Stevens, the chief operating officer, said that Admiral had referred “roughly a third” more suspicious claims to its specialist team during the period, compared with last year’s first half.

Mr Stevens said that Admiral, which specialises in UK car insurance, had discovered instances of fake whiplash claims after minor prangs, or clients lying about how many passengers they had in their vehicles at the time of an accident.

“There is some evidence that people are either creating fictitious claims or lying about the number of people in their cars,” he said. “The industry is feeling some rise in fraud, including organised gangs committing fraud.”

In the year’s first half, Admiral identified fraud and avoided paying out in claims worth 2 to 3 per cent of the £404.6 million in premiums that it had written, according to Mr Stevens. Because some fraud is not detected, fake claims are likely to represent about 4 to 5 per cent of all written premiums, he said.

Admiral is not alone. Aviva, Britain’s largest household insurer, said that it had found 29,000 fraudulent claims worth a total of £200 million in 2008, a rise of 30 per cent by volume and 20 per cent in value. Cases of insurance fraud have risen a tenth so far this year, Aviva said.

Andrew Buck, claims fraud manager for Aviva, said: “We have seen significant increases in both the motor and household arena. We cannot say how much of this is solely down to the economic climate. Clearly when times are tougher, crime increases.”

An estimated £1.9 billion in fraudulent general insurance claims go undetected each year, according to the Association of British Insurers (ABI). The claims, which include clients lying about their past to try to cut the cost of policies, add on average £44 a year to the cost of an individual policy, the ABI said. Although the ABI has found that insurers are raising detection rates — the industry rooted out £730 million of fraudulent claims in 2008, up 30 per cent on the previous year — it also said that evidence suggested that the recession was spurring activity.

RSA, the UK’s largest commercial insurer, found in a survey this year that 4.7 million Britons did not think it wrong to file a fraudulent claim, The figure is 1.1 million higher than RSA found in research last year.

Admiral’s first-half pre-tax profits rose by 5 per cent to £105.3 million, a record, after a 19 per cent increase in group revenues to £243.1 million. Profits from its UK car insurance operations rose 18 per cent to £101.2 million.

A record dividend of 27.7p a share means that Henry Engelhardt, the founder and chief executive of Admiral, will bank £11.2 million. He owns 15.22 per cent of the company.

Admiral yesterday handed its 3,000 staff shares worth £1,500 each, worth a total of £4.5 million.

Web Timeonline

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Family Sued Over Alleged Insurance Fraud

Carbon County couple charged with defrauding more than a dozen companies out of millions of dollars is facing a lawsuit. According to court documents. All Staffing Incorporated owned by Stanley and Angela Costello of Lansford was hired to handle workers compensation insurance for several companies in Pennsylvania and New York. Now one of those insurance companies has slapped them with a federal suit. The company claims the Costellos never followed through with their services... and pocketed millions,. Lawyers on both sides of the suit could not be reached for comment tonight.

69 News - WFMZ-TV

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Insurance fraud cons corrected

Issues with jail overcrowding and the high cost of prisoners has many counties turning for relief to alternative sentencing options.

Marion County recently received a $100,000 grant to begin developing a community corrections program.

Meanwhile, Taylor County undertook the large task of starting one last year.

Now that the Taylor County program has turned one year old, I spoke with the director and participants to find out more on the programs challenges and successes.

"I was a drug addict, and I had many years doing drugs. I found myself catching a breaking and entering charge. This was probably the worst thing in my life I've ever done, but maybe the best thing because its changed me 100%," said Daniel Allen Whetsell a participant in the Taylor County Community Corrections Program.

Daniel Whetsell can be described as nothing but a success story of the Taylor County Community Corrections Day Report Center.

After hitting what he describes as "rock bottom" in his life, he was sentenced to complete the community corrections program in lieu of jail.

"I was ready to make a change. It was time for me to grow up. I'm 26, I have a daughter and I was ready to better myself for her and myself," said Whetsell.

Going from drug addict and criminal to "ready for a change" does not happen overnight. That comes from the structured program Community Corrections Director Tammy Narog provides.

"On this program they have the opportunity to improve themselves and step down to probation or they can make some bad choices and they can go to jail," said Director Tammy Narog.

Only non-violent offenders who go through an extensive screening process by Judge Alan Moats are given the option of community corrections, which is stricter than probation but less intense than incarceration.

While the crimes vary, from embezzlement to petty larceny, almost all community corrections offenders have one thing in common:

"Probably I would estimate around 90% of the people that come into our program have some kind of drug or alcohol issues," said Narog.

To address those issues all offenders are required to attend substance abuse and AA meetings every week.

"First of all people need to understand that it is possible to lead a life in recovery, and I think a lot of people come into this program and think 'that's just not possible for me I've tried too many times, failed too many times, it's not going to happen for me," said Community Corrections Counselor Valerie Corley.

Besides therapy, program participants lead a very structured life. There are educational (GED) classes, parenting and anger management sessions, employment services and a lot of community service.

The participants have worked on everything from restoring historical buildings in Grafton, cleaning up parks, working at Tygart Dam, and washing police cars and fire trucks.

"And when they are not in treatment, when they are not doing community service, when not participating in educational programs, they are confined to their house," said Narog.

But Narog says structure is often what these offenders need.

Joshua and Tonya Shipp were sentenced to the program for conspiracy to commit insurance fraud.

After just five months of the program, they too are on the path to success.

"You get a lot of things done that you never even... like a GED. I never even thought of getting a GED before I got put on this program," said Tonya Shipp.

"We also have full time employment," said Joshua Shipp. "It's my first job ever!," said Tonya.

Daniel Whetsell also works two jobs and just recently opened his own lawn care company called Gettochild Lawn Care.

"I started a lawn care company in this town and I'm up to about 15 customers so far," said Whetsell.

Nagrog says she's proud of the progress many have made.

"I've had some wonderful success stories," she said.

And she hopes many of the people in her program will continue their success even after they graduate.

"I will never go back to my old life," said Whetsell.

There are currently 130 people on the Taylor County Community Corrections program and it really takes the cooperation of everyone in the county, from law enforcement to businesses willing to hire the offenders, to make the program work.

Officials say its worth it because from January to May 2009, the community corrections program has saved Taylor county, and its taxpayers, $125,000.

Karen Kiley
West Virginia Media

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Fraud tricks revealed

The most recent scams revealed

The ABI's recent report on the cost of insurance fraud revealed that undetected fraudulent general insurance claims now totals £1.9bn a year. That's an increase of 24% from £1.6bn according to the figures.

Scams including the withholding of information about a speeding conviction, listing the wrong address for a motor insurance policy and fraudulent accidental damage claims made on home insurance policies are estimated to cost £5.2m every day, adding, on average, an extra £44 a year to every household premium.

The ABI released details of some of the cheats exposed recently. They include:

- A policyholder who claimed for the theft of DVDs that he said had been bought locally, despite the fact that they had yet to be released in the UK.
- Similarly, a man who claimed for damage to a 42-inch LCD TV had his claim rejected as he said he purchased it before it actually came onto the market.
- A woman that claimed for the theft of her campervan, even though it had been written off beyond repair ten years previously.
- A personal injury claim that was exposed when the claimant was filmed driving and shopping, despite his assertion that he was virtually housebound.
- A claimant that was found in contempt of court and fined £2,500 for inflating a claim of damages for personal injury.

Independent opinion research commissioned by the ABI into public attitudes towards insurance fraud also revealed that:

- 16% would not rule out making an exaggerated insurance claim.
- Just over four in 10 (44%) think it acceptable or borderline behaviour to increase the value of an item when claiming. Three in 10 feel the same way about overstating the extent of any damage being claimed for.
- Those in the North East and the West Midlands appear the most tolerant towards insurance fraud. One in four in the North East would not rule out making a fraudulent claim. And more people in the North East and the West Midlands see inflating the value of an item, or adding an item to a claim, as acceptable or borderline behaviour than elsewhere in the UK.

Insurancetimes UK

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