AXA bolsters zero-tolerance policy on fraud with £20,000 court win

AXA has ramped up its actions against fraudsters following a landmark case that saw the insurer help secure a criminal conviction and be awarded a £20,000 settlement.

AXA, which investigated 5,000 suspicious claims last year, has introduced a zero-tolerance policy to fraud and plans to involve the police in every instance.

The new hard line follows the recent court victory it won against a motor policy holder.

Phil Reid, claims fraud manager for AXA, said: “This case is a brilliant example of something we’re looking to achieve. We’d like to get to where those who commit fraud face real consequences, because it can have a big impact on premiums.”

Phil Rawlings, technical manager for AXA motor claims, added that the case opens the door for more insurers to pursue legal action.

He said: “The more that we can expose this type of case, the more confidence people will have about doing this. It’s not an easy step to take because it’s time consuming and expensive, but we are determined to take a hard line on it.”

Nicholas Young, partner with London-based solicitor Davies Arnold Cooper, said it was rare for insurers to take suspected fraudsters to court. They are usually satisfied with voiding the policy and refusing to offer the individual cover in the future.

“You need to have very strong evidence and be able to generate police interest, and get both those things together. Then the police have got to have the resources available to actually investigate. So it’s certainly not easy and from a practitioner’s point of view, it is rare,” he said.

In a recent poll of 40 of its brokers, AXA found that 55% believe fraud, which cost the insurance industry £1.6bn in 2007, is driving up insurance costs significantly. Thirty-three per cent believed it had some impact, while just 13% said there was no impact.

AXA won a civil action against 46-year-old Andrew Thwaites of Sheringham, Norfolk, at the beginning of this year, and spoke out about it for the first time this week.

He had submitted a claim for alleged malicious damage to his Rolls-Royce. He informed AXA that he had returned home to find the front grill, steering wheel, two seats, hub caps and even the female mascot on the bonnet – a registered trademark known as the Spirit of Ecstasy – all missing.

Suspicious of his £10,000 claim, AXA used an insurance investigator who discovered from a neighbour that it was actually Thwaites who had removed the parts, which were still in his house when police arrived.

Thwaites was criminally convicted in July 2005 and handed a suspended sentence of three months in prison effective for two years dependent on good behaviour.

AXA then pursued and won a civil recovery action for £20,000, which included the costs and expenses incurred in handling the claim.

It was the first time the insurer had been able to reclaim costs for expenses. The judge said if Thwaites had not been criminally convicted, AXA would also have had the right to pursue a claim for exemplary damages.

On 8 February, at Norwich County Court, the judge handling the civil case said: “I have not the slightest doubt that this was a deliberate and serious deception carried out by Mr. Thwaites in the hope that he could obtain some £10,000 from his insurer.

“It is very important to stop this sort of behaviour. It is anti-social,it puts up other people’s motoring costs and is blatantly dishonest.”