Now in its seventh year, IFED has convicted 433 insurance fraudsters, leading to 239 years in custodial sentences, 108 years in suspended sentences, 13,355 hours in community orders and more than £100,000 in fines.
The unit works in collaboration with multiple law enforcement agencies, together with insurers and the Insurance Fraud Bureau, which provides information and intelligence, and is funded by a compulsory levy on members of the Association of British Insurers and the Corporation of Lloyd’s.
Collectively, members of the ABI and the Corporation of Lloyd’s have invested more than £30m since 2012. Indeed, detective chief inspector Craig Mullish, acting head of IFED, says the department receives around £4m from the trade association and Lloyd’s every year.
As the insurance industry, and as a part of the larger financial services industry, we can improve our efforts to combat financial crime by sharing information appropriately.Ryan SmithSo how exactly do industry and police work together to fight fraud?
Industry’s priority
As its name suggests, IFED is the specialist police fraud unit investigating insurance fraud.
Examples of this include staged motor accidents and commercial public liability fraud, as well as emerging threats such as illegal insurance advisers or ‘ghost brokers’.
While IFED primarily targets general insurance fraud, which it says is the most common, it also investigates some longer-term frauds.
IFED’s Mr Mullish explains: “Motor insurance makes up about 45 per cent of fraudulent insurance claims and so is a big part of the work we’re seeing.
“There is also ghost broking and individuals who want to benefit on the back of a disaster, such as the Manchester bombings and Grenfell tower disaster; it’s a problem that people will always look to profit from other people’s huge misfortunes,” he continues.
“Effectively ghost broking continues, whereby criminals are selling fake insurance policies to members of the public, and members of the public think they are insured but are not. And that’s a continued threat to the industry and a continued threat to the public.
“This is where IFED works with the industry to ensure we prosecute the individuals.”
Mark Allen, fraud and financial crime manager at the ABI, explains in 2011 the City of London Police was facing resource cuts, and combined with the arrival of locally elected police and crime commissioners, meant it was likely community-related crimes, rather than economic crimes such as insurance fraud, would take priority.
Mr Allen continues: “The insurance industry recognised that if it was to make real inroads into curtailing insurance fraud – which was increasing with detected claims fraud valued at £1.2bn in 2011, an increase of 9 per cent on 2010 – it needed to look at funding a unit dedicated to preventing and enforcing against insurance fraud.”
Similarly, Ryan Smith, corporation financial crime manager at Lloyd’s, says the insurance market recognised it had a role to play in combating financial crime and criminals who “exploit the diversity and entrepreneurial nature of the financial services sector”.
Mr Smith adds: “As the insurance industry, and as a part of the larger financial services industry, we can improve our efforts to combat financial crime by sharing information appropriately.”
Collaboration
The insurance industry collaborates with IFED by sharing information to help build cases and investigative leads with a view to prosecution.
But it also works with the National Fraud Intelligence Bureau and receives reports of alleged insurance fraud through Action Fraud – both of which are part of the City of London Police as the national lead force for fraud.
It also works closely with partner agencies, such as the IFB, with access to insurers’ databases and intelligence.
Mr Mullish explains: “The [insurance] industry will refer a case to us, where they believe criminal activity has been undertaken.
“The referrals come directly from the industry; it has a plethora of intelligence and information that they provide to us.”
He adds: “We don’t accept all cases, but consider all cases that are referred; nobody can do it alone, we need collaboration to be successful.”
Similarly, the ABI’s Mr Allen explains the insurance industry works with IFED to develop its strategy and monitor its operation and performance through the governance arrangements.
He says: “IFED works closely with the ABI and IFB – the latter playing a key role in working with IFED to build cases and identify linked networks in organised scams.”
He continues: “Collaboration was a key theme of the government’s Insurance Fraud Taskforce in 2016, which made a number of recommendations to make the UK more resilient to insurance fraud.”
“Aside from making economic sense, working in partnership is also a regulatory expectation of the Financial Conduct Authority.”
Possible conflicts?
Mr Mullish says there is absolutely no conflict of interest in terms of the department being funded by the insurance industry to catch insurance fraudsters.
He says: “We are funded by members of the ABI and Lloyd’s group on the basis that we are operationally independent; any cases that are referred to us or that we develop we accept independently, we are not influenced by any insurer.
“And that is quite clear in the agreement between industry and law enforcement.
“We can’t be in a situation whereby we are persuaded by insurers to take on specific cases. We are absolutely 100 per cent independent and that is how we have been successful.”
Likewise, the ABI’s Mr Allen explains IFED is bound by the fundamental police principle of operational independence.
According to Mr Smith, IFED’s distinct mandate, and the fact that it is independent of the UK insurance carriers, is intended to address the possible perception of conflicts of interest.
He says: “We share a common goal with law enforcement in combating financial crime, as criminals make our financial services system more costly for those using it legitimately.”
Jiten Varsani, mortgage and protection adviser at London Money, believes any collaboration between the IFED, the ABI and Lloyd’s, can only be a good thing.
Varsani says: “This is provided that each sticks to their area of speciality and provides support and advisory service to the other. I don’t think we want the ABI or Corporation of Lloyd’s dictating how the police should do their job.
“As for the funding, if these bodies are funding the cost of the IFED in order help reduce fraud, I do not see a conflict of interest.
“The benefits are reaped by all concerned; from the client who does not face higher premiums due to fraudulent claims, to the insurance industry that can pay out to genuine claimants who need the money when it really matters most.”
Victoria Ticha is a features writer at Financial Adviser and FTAdviser
