May 8, 2013

Post magazine ran a very interesting blog piece this week in which Andrew Andrewson of Cetalon claims there has been an exponential increase in insurance fraud over the past six years. He says we should not blame mafia-like gangs but ‘individual households, motorists and businesses that cost insurers £2.1bn annually.’ Bankstone News is never one to shy away from blaming ordinary people and businesses. But what can be done to curb this menace?

A regular devil with an industry-specific statistic, Andrewson reveals that the ABI’s 350 members paid out £3.3bn for household claims in 2012 and £9.3bn on motor claims, figures which he says are rising daily. An average house fire or flood costs around £10k, and theft £1500, he notes. Wouldn’t it be great if insurers didn’t have to keep forking out for this nonsense? Well, maybe they don’t!

Insurers are pretty rubbish at catching fraudsters out, Andrewson says. In 2001 they prevented a pitiful ‘£40m in fraudulent long term claims’, he notes, accusing them of being happy ‘to watch from the side lines as the Police Insurance Fraud Enforcement Department, Insurance Fraud Bureau and Insurance Fraud Register mop up long after the horse has bolted,” which should at least, Bankstone News would have thought, leave the claims stables nice and clean.

No, he concludes, ‘chasing fraudsters post pay-out is a thankless task as the individuals are likely to be long gone.’ What insurers should do, Andrewson reckons is invest heavily in ‘more accurate cost-effect information management’ to ‘ensure there is a very good chance of stopping fraud.’ That does sound compelling, but where could they go to make that kind of investment?

Perhaps Andrewson can offer a suggestion here. ‘The best way of rooting out fraud and managing daily regulatory challenges is adopting technology that can automatically check for compliance in every claim document, eliminating errors and making the claims side of the business a money earner rather than loss maker.’

He continues in a similar vein for a couple more paragraphs, and it’s all starting to sound really great. Frankly, if Bankstone News were an insurance company, we’d be reaching for our cheque book right now. But then the piece ends suddenly and, absurdly, Andrewson neglects to say where insurers can turn to make this no-brainer type investment in claims sifting technology.

Or maybe he did, but somebody at Post magazine forgot to include this vital information. That’s probably it!

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