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
Hard times bite for Insurances fraud
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
wfmz.com
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
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
Brokers fined $700,000
FSA says customer data 'could have ended up in criminal hands'
HSBC Insurance Brokers has been fined £700,000 for failing to protect confidential customer information.
The FSA, which also also fined HSBC Life £1.6m and HSBC Actuaries £875,000, said the group lost customer data in the post on two occasions because of sloppy controls.
During its investigation into the firms’ data security systems and controls, the FSA found that large amounts of unencrypted customer details had been sent via post or courier to third parties.
Confidential information about customers was also left on open shelves or in unlocked cabinets and could have been lost or stolen. In addition, staff were not given sufficient training on how to identify and manage risks like identity theft.
Despite increasing awareness of the need to protect people’s confidential details, all three firms failed to put in place adequate procedures to manage their financial crime risks.
Margaret Cole, director of enforcement at the FSA, said: “These breaches are very disappointing. All three firms failed their customers by being careless with personal details which could have ended up in the hands of criminals.
“It is also worrying that increasing awareness around the importance of keeping personal information safe and the dangers of fraud did not prompt the firms to do more to protect their customers’ details.”
In April 2007, HSBC Actuaries lost an unencrypted floppy disk in the post, containing the personal information of 1,917 pension scheme members, including addresses, dates of birth and national insurance numbers.
In July 2007, all three firms were warned by HSBC Group Insurance’s compliance team about the need for robust data security controls.
However, in February 2008 HSBC Life lost an unencrypted CD containing the details of 180,000 policy holders in the post.
The confidential information on both disks could have helped criminals to steal customers’ identities and commit financial crime.
Cole said: “Fraud, particularly identity theft, is a major concern to everyone and firms must ensure that their data security systems and controls are constantly reviewed and updated to tackle this growing threat.
“In areas where we have previously warned firms of the need to improve, people can expect to see fines increase to deter others and change behaviour in the industry.”
The firms have taken a number of remedial actions to address the concerns raised, including contacting the customers concerned, improving their staff training and requiring that all electronic data in transit is encrypted.
HSBC Insurance Brokers, HSBC Actuaries and HSBC Life co-operated fully with the FSA in the course of its investigation.
All three firms agreed to settle at the early stage of the FSA’s investigation and qualified for a 30% discount. Without the discount, the fines would have been £1m for HSBC Insurance Brokers, £1.25m for HSBC Actuaries and £2.3m for HSBC Life.
Insurancetimes UK
No Jail To British Grads
The two British law graduates facing trial in Brazil for charges of fraudulent insurance claims will not have to return to prison, a lawyer claimed today.
Renato Tonini said he was confident that even if Shanti Andrews and Rebecca Turner were convicted, they would be able to serve their punishment without being sent to jail.
Miss Andrews and Miss Turner, both 23, were freed on bail on Saturday and were today staying in a hotel ahead of a court appearance in Rio de Janeiro on Wednesday.
Mr Tonini said the women, both University of Sussex law graduates on a nine-month journey around the world, will have the charge of attempted insurance fraud read to them in English during the hearing.
Speaking from Rio de Janeiro, Mr Tonini said: 'I'm very confident that they will not be going back to prison. Even if they are convicted, I think a fine would solve the problem.
'The next step is the court appearance on Wednesday, where someone will read the charge to them in English.'
Mr Tonini said he hoped a judgment would be made on the merit of the charge in up to four weeks' time.
In the meantime, the lawyer said the women had voluntarily surrendered their passports to the Brazilian authorities to show they have no intention of fleeing.
The pair are alleged to have told police in the South American country that belongings totalling £1,000 had been stolen during a bus journey.
The pair were taken into custody at dawn last Monday after officers from a specialist tourist support unit apparently became suspicious that they had waited several days before reporting to police.
The website of Rio de Janeiro state's civil police said the pair had tried to register a robbery, alleging they had been attacked.
A subsequent search of their lodgings in Copacabana allegedly uncovered some of the belongings that they had originally told officers had been stolen.
After being freed from custody on Saturday, the women spoke of their ordeal, surrounded by drug traffickers, robbers and murderers before being moved to a second jail they described as entering 'the gates of hell'.
Describing the first jail, Miss Turner told the Mail on Sunday yesterday: 'It was a living nightmare. It was the most terrifying thing that ever happened to me in my life.
'They only spoke Portuguese and we only spoke English and there were moments when we wondered if we would ever get out of there.
'The centre had no cells, just five or six open rooms, each measuring about 12ft by 10ft and 25 women crammed into each.
'It was so cramped we slept in the corridor but it was still so tight that at night you had to lie on your side. Everyone slept on the concrete floor. They just gave us a thin blanket each.'
Miss Andrews' father Alan is said to have used part of his life savings to travel to Brazil to help gain their freedom.
Miss Andrews' mother, Simone Headley, who lives in Frant, near Tunbridge Wells, Kent, told earlier this week how the two friends were traumatised by their ordeal and that it had been a 'misunderstanding'.
Daily Mail
Insurance Fraud
The number of people making fraudulent insurance claims is on the rise. However the major problem with this is that it pushes up the cost of insurance for everyone else.
"The medical profession is traditionally held in high regard but it too contains its sinners. A very exact picture has emerged from fraud-busters in South Africa, indicating that six per cent of bills submitted by doctors or hospitals for payment by insurance companies are wholly unjustified.
The figure was produced by Patrick Lubbe, financial director of Medical Services Organisation in Johannesburg. The risk-management company handles claims from 1.1 million people holding medical cover with 28 insurers and mutual benefit companies.
Mr Lubbe's staff of 180 – mainly former nurses – handle 60,000 medical and dental claims a month. From such a large database he is easily able to spot unreasonable claims from more than 6,000 "procedure codes" ranging from scans and blood tests to cyst removal and open-heart surgery.
"You'll be amazed how many dental providers try to pull out the same tooth six times," he says. "We think five to six per cent of admissions are not justified."
One doctor claimed 21 times for inserting grommets to overcome "glue ear" when the operation he had actually carried out was a cosmetic procedure – flattening "stick-out" ears. "He owed us 21 times 35,000 rand, (£2,600)," Mr Lubbe remarks dryly.
In another case, an orthopaedic surgeon attempted to charge three times the accepted rate for a knee operation. Some of the worst abuses involved emergency admissions, some brought in by helicopter. "When a patient lands, [some claimants] see a cheque book in dollars or pounds sterling."
Lifeinsure UK
35 years is enough
ID theft victim of 35 years elated ’ at arrest A man who was the victim of a 35-yearlong identity theft said yesterday he ’s so happy about an arrest in the case he could kiss the special agent who handled it.
Tom Lesh, 66, of Coos Bay, said he ’s known since the 1970s that his brother ’s friend stole his identity, and he appealed to everyone from the IRS to the suspect ’s own mother for help to no avail. As the decades wore on, he said, he spent "thousands of hours" writing letters to credit card companies, banks, insurance companies and government agencies, trying to clear his name.
"At one point I thought about getting a hit man, but I worried that with my luck, they ’d get the wrong Tom Lesh," he joked.
Finally, this year, insurance fraud investigator Sandy Larson took up the case, when an insurance company had received claims for treatment a Tom Lesh received at a Seattle hospital, but the real Tom Lesh told the company it wasn ’t him.
Larson forwarded the matter to Matt Lavelle, a special agent with the Social Security Administration ’s Office of the Inspector General, who tracked down the suspect, a 58-year-old truck driver whose real name is Clark Mower. and arre~thd him. AP
Wairarapa Times Age
Insurance fraud costs policyholders £1.9bn a year
nsurance fraud has soared to an estimated £1.9 billion a year, costing the average household £44 annually in higher premiums, a report showed today.
Insurers said that around £5.2 million of fraudulent claims go undetected every day, a 24pc increase compared with two years ago.
The Association of British Insurers said that member firms are also detecting more fraud, with suspect claims worth £730 million rejected last year, 30pc more than in 2007. It added it had seen an increase in the number of people who were caught lying or withholding relevant information in an attempt to get cheaper insurance premiums.
In one case, a woman claimed for the theft of a camper van that had been written off beyond repair 10 years earlier, and in another case a man had a claim for a 42in LCD TV rejected because he claimed he had bought it before it became available on the market.
The ABI said as insurers got better at detecting fraudulent claims, people were shifting their focus to the other end of the process and being economic with the truth in order to get cheaper cover.
Popular scams included withholding information about a speeding conviction, listing the wrong address for a motor insurance policy or listing a parent as the main driver of a vehicle that was used most by a newly qualified driver.
The ABI said it had also seen an increase in the number of fraudulent accidental damage claims made on home insurance policies, with people deliberately damaging furnishings or electrical goods so that their insurer would pay for new ones.
It also reported a 35pc increase in claims involving the damage or loss of high value watches, laptops and LCD televisions.
Household insurance policies saw the highest level of detected fraudulent claims by volume, while motor insurance ones had the highest level in terms of value, with staged accidents still common. The ABI also reported a rise in the number of claims which were dropped by consumers once insurers started asking them for more information.
Nick Starling, the ABI's director of general insurance and health, said: "There is no hiding place for insurance cheats. Honest customers should not have to pay for the fraudsters. Closer scrutiny of proposal forms and claims, as well the exchange of information through industry-wide databases, is tightening the net on the cheats.
"Getting a criminal record, as well as difficulty in obtaining and more expensive insurance and credit problems await anyone who sees insurance as a soft touch."
But research carried out by the ABI found that 16pc of people would not rule out making an exaggerated insurance claim, while 44pc think it is acceptable to increase the value of an item when claiming. A further three out of 10 people thought it was acceptable to exaggerate the extend of any damage being claimed for.
People in the North East and West Midlands were most tolerant of insurance fraud, with a quarter of people in the North East saying they would not rule out making a fraudulent claim, while people in both regions were more likely to think it was acceptable to inflate the value of a claim.
£44 cost to us all of fraud
INSURANCE fraud has soared to an estimated £1.9billion a year – adding £44 to the average household’s annual premiums, it was claimed today.
Insurers think around £5.2million of fraudulent claims go undetected every day, 24 per cent more than two years ago, according to a poll by YouGov Financial Services.
But they are also detecting more fraud, with claims worth £730million rejected last year, 30 per cent up on 2007.
The Association of British Insurers said the number of people lying or withholding relevant information to get cheaper insurance had also risen.
Popular scams included withholding information about a speeding conviction or listing a parent as the main driver of a vehicle mostly used by a new driver.
But household policies saw the highest number of frauds. In one case, a man’s claim for a 42in LCD TV was rejected when he said he bought it before they actually came on the market.