Police unit scores its first success in war on fraud

An inept motor insurance cheat has become the first person to be convicted after an investigation by the new City of London police anti-fraud unit.

John Machin was recorded bragging about the cash he expected to receive and how he planned to spend it after he forgot to switch off his phone following a conversation with a claims investigator.

The case was an easy win for the new Insurance Fraud Enforcement Department (IFED), which increasingly faces a challenge to narrow down which cases to investigate from the huge number of referrals it receives. 

The sheer volume of referrals - 180 so far this year - has already forced the team to tighten its case acceptance criteria. An even narrower scoring system is likely to be introduced later this year following a second threat assessment.

Detective chief inspector Dave Wood, who runs the IFED team, said: “The scoring is getting tighter because we’re getting busier. More cases are being rejected now than
in January.

“Some of these characters are quite creative. Whatever’s possible, they’re doing it. Among organised fraud, we’ve found links to drug trafficking, prostitution and terrorism.”

Wood described Machin’s mistake as “comical”, adding: “He’d phoned up and relayed a tale of woe regarding an accident with his motor car and forgot to put the button down on his phone. He carried on talking, saying what a great scam it was, how he would be quids in, and what he’d spend the money on. It was all recorded by the investigator.”

Machin was ordered to do 120 hours of community service and given a six-month suspended sentence.

Wood said: “That was quite good. When we get organised groups we’ll be looking for custodial sentences.”

The IFED was launched in January with £9m from insurers to cover a three-year budget. Its officers gather evidence for prosecutions and make arrests on tips from the industry.

The IFED is working on cases with a combined value of £7m, a fraction of the estimated £2.1bn cost of insurance fraud each year. Jobs are prioritised using a case acceptance matrix, which scores them against a range of criteria, including concerns raised as part of a threat assessment carried out by the police last year.

Wood said: “Every job has to go into the matrix - a whole lot of things get bundled in and you multiply it and get a score.

“We’re mindful that with the first threat assessment we didn’t have a lot of time, so we want to do another one. We’re reaching out to insurers for them to feed in, to see what concerns and interests them, and our operational plan will go from there.”

The unit has made 60 arrests since January, including busting several ghost brokers and identifying numerous ‘cash for crash’ rings.

“One ghost broker has been arrested and bailed, and we’re awaiting Crown Prosecution Service blessing to go ahead and charge. The ‘cash for crash’ cases are more involved. If it’s a scam you have to arrest every person, so those take a bit of time.”

A total of 10 people have been cautioned to date, which means that they get a police record, have finger prints taken, are photographed and have to give a DNA sample. Their names will also go on the National Fraud Register database, which goes live in the third quarter of 2012.

Latest figures from the ABI show that insurers uncovered 133,000 fraudulent claims in 2010, 9% more than the year before. Value of claims also rose by 9%, to £919m, in the year. There were 66,000 bogus or exaggerated home insurance claims and 40,000 dishonest motor claims.

Casualty fraud is catching up fast, however, and it is thought to be the fastest-growing category of fraud. The total estimated value of all insurance fraud is currently pegged at £2.1bn.