Insurance Fraud Investigation in the UK - Research Paper Example

Introduction The article explains about the insurance fraud happening in United Kingdom and the discrepancies in its detection and investigation. Thearticle claims that the Insurance fraud costs UK 2.1 billion pound per annum. The article explains that there is less research on the fraudster’s profile and the claim investigation process. The fraud is a growing problem and this research article concentrates on the characteristics of the fraudulent claims and analyzes it with the help of fraud specialist in the country. This research article is using series of fraudulent claims to show the different types of claims which investigators use to detect the crime. The Serious and Organized Crime Agency has defined insurance fraud as an interlinking crime with other serious crime as terrorism, money laundering and drugs trafficking. The articles probes into the nature of insurance frauds in UK and its demography and investigation nature The research article is stating on the demography characteristics of the insurance frauds and their race and ethnicity .It is estimated that the main offenders are males according to the prison survey. This was same in UK, Scotland and Canada and U.S. The article claims that in UK the majority offenders are white, while in Canada the prisoners who were nationals are very less while U.S had more Hispanic and African Americans as offenders. The violent crimes of these prisoners included assault, murder, sexual offences and kidnapping. It is mostly ethnical and racial minorities who perform crimes and they come under the age of 35. However, the research conducted revealed that the demographic profile of white collars was different and they committed crimes like property crimes, forgery & counterfeiting, embezzlement and fraud. Their profiles only contained age, sex and race and they are older than other offenders. These white collar offenders were different from common criminals and they were usually middle aged whites. The elite white collars were typically from upper-class and had regular profit and enjoyed luxurious lifestyle. The article suggests that the psychological methods can be applied to investigate such fraudulent crimes. There is however less academic research in this field when it comes to financial sector. The insurance sector face many challenged due to fraudulent claims and the research on computer based fraud is limited. White collar crimes and its victims need to be studied so that one can understand from whom such crimes tend to originate. Most of the fraud acts remain undetected and the reason behind is the ignorance and lack of skill from the investigation department. The insurance industry has lost much due to such frauds and when coupled with anti – fraud technology it is doubled. The insurance industry has not taken enough steps to combat this problem and the employees are not trained to resist such frauds. The insurance employees are not skilled enough to detect such fraud claims and blame can be partly put upon insurance industry. There is no staff with fraud knowledge in insurance companies to avoid such fraud crimes. The insurance industry need to motivate staff to detecting and reporting anomalies. The companies need to be more alert to such problems and need to install software’s which can detect discrepancies in claims. The claim agents need to be trained regarding fraud detection method because without technical information detecting crimes is not possible. Throughout the claim processing cycle the staff needs to be alert. The problem with white collar crime is that the criminals are not identifiable easily. They are whites more often and look dignified and professional. Since the crime is not of a violent nature the criminals can be educated and from better social classes. The demographic information in the article suggests that white collar criminals are different from other criminals. The staff of the insurance industry need to be cautious of male clients as it is suggested that offenders are mostly male than female. The criminologist and psychologists have always given more interest to the demography of the criminals. The research in to the field of offenders has shown that demographic features of the offenders in all societies have common nature. In Wales & England more of the offenders are 18 years old or more and very less offenders are females. The research has indicated that the claims have been rejected due to suspicion or misrepresentation of facts and corrupt data presentation. The policy holders were also interviewed to fill facts which were not filled before. The call recording of such interviews was used by the investigators to understand the fraud claims. The Clarke who studied the insurance frauds aimed to identify the crime’s nature and found that there are 3 different types of fraudster. They are the opportunistic, the amateur and the professional. The insurance fraud happened more often during the first year of policy. The problem is that insurance industry is not raising awareness among public about the fraudulent acts. The public need to know that fraud is a public problem and it contributes to great amount of financial loss. The insurance industry need to be more professional by giving training to insurance staff, formation of information exchange a about fraudsters and attempted frauds. The research suggests that now insurers are controlled to avoid frauds and doubtful claims are inspected before accepted. The recent investigation in to the insurance frauds in the UK has given a broader view on the nature of this crime. There is a memorandum between the insurer and the police which makes things more legally viable. However, one complex fact is that exaggerated claims are excluded from the fraud classification. (1st article) “Exaggerations within genuine claims were not Perceived as fraud therefore distinguishing between claims that are partially or wholly Fictitious”. The problem with this crime is that there is no clear definition as to the nature of fraud claims. Fraud has been defined as theft by deception or the dishonest obtaining of property. The fraud can be committed by three ways that is by false representation of information, by abuse of position or by supplying false documents. The frauds were committed by people who were above the age of 50 years. Most of the criminals were married or cohabiting. In UK most of the frauds were from West Midland and Yorkshire, London and Lancashire. The fact is that most of the claimants only provided their home telephone number only a few presented their mobile numbers. On the other hand, the fraudsters only provided mobile numbers which were “pay as you go mobiles”. This is because these numbers were easily disposable and home numbers are more identifiable and traceable. So it could be suggested that insurance company should make it mandatory to collect the home telephone number of the clients to investigate matter if fraud is detected. The one way to avoid such fraud is to improve technology, training and developing industry solutions. The insurance fraud is an easy way to earn large amount of money. The insurance fraud claim investigation is done in a different way than other crime investigation. In insurance frauds, the crime needs to be studied deeply to identify the characteristics of the offence. The investigator needs to identify whether the claimant is telling a truth or lie. People being extremely poor at lie detecting finding the criminals who perform insurance frauds is not easy. The accuracy of detecting lie by experts is less and hence these frauds are not easy to detect. There is no appropriate way of detecting fraud many misinformed signals can be grooming gestures, body language and looking away. The insurance companies has to be alert in this cost – conscious economy and they need not invest millions of pound in technology , hardware or equipment to do a better investigating job. The insurance companies need to be more aware of the demography of the fraudsters and stop giving a free pass to elderly claimants who are mostly recognized to be frauds. No group should be singled out and the staff should look at all aspects of insurance fraud equally and fairly regardless of person’s age or background. Failure to do so is disservice to one’s profession, one’s employer and the policyholders who trust them. There should be complete counter check on the claims and the frauds should be prosecuted to avoid such frauds in future. The insurance companies should not take the claimants for face value and should consider them with suspicion. The insurance claim on motor vehicles had been many times fraudulent ones. Many vehicles which were believed to be stolen where recovered by police or insurers but the stealing of the cars were intentional or real were not a known fact. So the effectiveness of ISR is not sure. There is a belief that the claimants will hide their vehicle and then they sell the vehicle. They also use it after getting the claim by changing the registration date. According to (2nd article ) “This supports some belief within the industry that fraudulent claimants will hide their vehicle in a resalable condition or to continue to use themselves with the vehicle on false vehicle registration plates”. Conclusion Insurance fraud is of large concern in up and there is less attention in the industry regarding this crime. The insurance fraud claims has given much loss to the insurance companies but the investigation team and law had been of less help to this matter. The insurance fraud has certain demographic characteristics and they belong to upper class community and are white males who are of elderly age. The insurance fraud is happening because of the ignorance and technical inadequacy regarding the crime. The insurance staff mostly underrates the chances of fraudulent claims because they take policy holders for granted. The staff needs to be more alert on the claims and should re- check the information provided by the policy holders during and after insurance is taken. The criminals who committed insurance fraud were white collar people. The insurance frauds were different and were committed by people who were educated, financially secure and living comfortably. These people were typical in the way they committed frauds and presented false information, identity and fake documents. The insurance fraud regarding the motor vehicles is high and then vehicles were mostly sold or reused by the claimant after settling the claims. The insurance company needs to be more organized and should analyze the data deeply to detect frauds. The staff needs to be given better training and other technology to manage insurance frauds. The insurance companies are tempted to increase the premium rates to compensate their losses and this is a risk to policy holders. Read More