Military analyst to root out insurance crooks
INSURERS HAVE hired a former British defence analyst to try to catch more fraudsters whose crimes add an estimated 10 per cent on insurance premiums.
Dave Ashton has been employed as manager of the Insurance Claims Register on which all insurance claims are logged.
The ICR is run on a not-forprofit basis, paid for by five insurers: Vero (which also majority-owns AA Insurance), Farmers Mutual Group, Tower, IAG (which owns State, NZI and AMI), and Lumley, which IAG has now bought.
It’s effectively a surveillance system for insurers to identify insurance cheats, and stop them from taking out new policies.
Set up in 1998, the ICR is now being copied overseas. It contains over six million files with the insurers logging in each claim made to them, said Ashton.
‘‘It was really designed for the insurers to collect claims data and look for patterns relating to fraud. By sharing claims data, it allows them to monitor individuals that move around between insurers,’’ he said.
Insurers generally check claims data for individuals either when they apply to take a policy out or at claims time.
The people the ICR is designed to identify are those who have been caught by insurers trying to rip them off, and those exhibiting suspicious behaviour and merit investigating at claims time.
This can include things like making claims with different insurers for the same event, or making repeated claims with one insurer after another.
‘‘My role allows me to work on behalf of the insurers to look for those patterns and trends,’’ Ashton said.
While some of that work was already being done, Ashton was appointed to engage in deeper analysis, including using analytical software, which has the potential for getting more intelligence from the database.
The other aspect of his role is keeping abreast of international patterns of insurance fraud.
In the internet age, methods and strategies of fraudsters could cross borders rapidly, particularly on social media, Ashton said.
Ashton said insurers see two types of fraudster. There are the professional criminals who do things like stage accidents – known as ‘‘cash for crash’’. These are the hard core that they seek to both prosecute and to exclude from getting insurance again.
Then there are those who pad a claim, such as asking compensation for more things than were actually stolen in a burglary.
It’s still illegal but insurers do not pursue many into the courts despite the fact they add to costs.
If caught, these offenders generally have their entire claim turned down and often their insurance cancelled. As this is entered into the ICR, it can also be hard for them to get insurance again or at least for the 10 years the record is kept.
Nobody really knows how much of the two types of insurance fraud goes on. In 2007 researchers estimated it at around $250 million a year. Today, Ashton said is was likely to be a $300m-$400m a year problem.