Insurers must be on guard as insurance fraudsters ‘come from all walks of life’ - IFED

The cost of living crisis has sparked industry conversations around the impact that the economic downturn will have on fraud rates.

Based on past recessions, many commentators predict that we could see otherwise law-abiding citizens now turning to insurance fraud as a means to ease financial hardship - whether that means exaggerating the cost of a stolen watch or doctoring a travel insurance document that does not cover what the policyholder expected it to.

In the coming months, the City of London Police’s Insurance Fraud Enforcement Department (IFED) will be reminding the public of a simple fact - insurance fraud is a crime.

There may be those who do not realise what they are doing is illegal, or those who need a reminder that bogus claims could land them with a criminal record.

Regardless of which category they fall into, we want the public to know that insurance fraud is not acceptable and it will not be tolerated.

While we expect to see a rise in financial hardship-driven claims, we must remember that insurance fraud is not just an opportunistic fraudster’s game. Increasingly, we are seeing this type of crime performed by criminal gangs, which often use the proceedings to fund further, more serious crimes.

The second quarter of 2022 saw IFED map an organised crime group (OCG) of insider fraudsters, which are thought to be using customer data to make bogus insurance claims, before subsequently laundering the funds.

This criminal gang brings the total number of OCGs currently being mapped and managed by IFED to 12.

Unexpected scammers

Looking back at the OCGs IFED has investigated in the past, it often seems that these groups are made up of characters that, on the surface, are not your typical member of a criminal ring.

In 2017, for example, six men were jailed after abusing their professional roles - some as solicitors.

The investigation revealed that the group had defrauded insurers out of £426,000 using fake invoices to claim for medical treatment following bogus road traffic accidents.

As much as we would not expect a well paid solicitor to turn to criminality, we also would not think that famous sportspeople with an online presence would expect to get away with being part of an OCG – but that’s exactly what happened in 2021.

A group of fraudsters last year cloned a genuine claims management company in order to obtain referral fees from solicitors. The same gang was also behind more than 60 fraudulent motor insurance claims.

The ringleader was a boxer who had featured in a BBC documentary – he had a large social media following that admired his lavish lifestyle and ostentatious vehicles. One of his co-conspirators was another former boxer that had featured on a reality TV show.

These two cases alone demonstrate that both opportunistic and organised insurance fraudsters come from all walks of life.

We often find these groups lurking in places where we would not necessarily expect them. Therefore, mapping crime groups is crucial to ensure that the correct resources and tactics are available and applied to effectively disrupt the criminality.

Education and enforcement

OCG disruption remains a top priority for us as a unit. We work collaboratively with the London Regional Organised Crime Threat Assessment (ROCTA) team to record and manage OCG disruptions, so that we can keep track of when an OCG has been convicted or dismantled.

In the past year, we have been involved in 14 OCG disruptions.

As we start to see the effects of the current economic climate, we expect that the last half of the year will be challenging in terms of tackling rising fraud rates.

Nonetheless, we are prepared to face these challenges head on by striking the right balance between education and enforcement.