A CEO’s Viewpoint.By

John Eves BA;MBS;FCCA;FCILA;Fuedi-ELAEManaging Director, Thornton & Partners

Joined T&P in 1983 Specialised in BI and “Fidelity” Joined Board in 1989 Managing Partner in mid 90’s Approx 250 people, 10 branches Standard PD, BI, Injury and Desk Specialist companies in Marine,

Engineering,Counter Fraud, Jewellery, Fulfillment

Three Functional Distinctions Insurance definition suggests fiction or

exaggeration Fidelity Guarantee – e\e fraud, bank &

bonds Transaction Fraud – Stewardship aspect

We are the Response Team, the Reactors Our actions are governed by the problem

presented Investigative strategy governed by scope of

the problem presented

Is it old fashioned “proper” adjusting? Is it a reclassification of what we already

do? Is there a standard unit of measurement? When is a fraud not a fraud?

The difference is one of degree Lawyers present can comment on the

continuum from: Inflated view – overstatement- fraud We all measure fraud differently Is our classification sufficiently robust – no. Where do all these numbers come from?

Good Adjusting Practice & Management Intake- point alerts at Agent\Insurer\

Adjuster Initial professional assessment, pre

inspection Conversation Management techniques pre\

post visit On-Site work Forensics, PI& MI

“Fraud is proven when it is shown that a false representation has been made:

knowingly; without belief in it’s truth, or recklessly, careless whether it be true or

false.”(Derry v Peek 1889)

It didn’t happen Set-up or Contrived Deliberate Genuine peril, but exaggerated Not covered, but made to fit No insurable interest

Fraudsters exploit simple weaknesses Don’t look for the complex Look for the blindingly obvious Traditional alerts, followed up by diligent

work The answer lies in best practice systems Customer service protocols- a fraudster’s

weapon

Errant behaviour more often caused by systems, not people

People with malintent exploit those system weaknesses

They don’t often create them In summary, opportunities present

themselves When looking for fraud, try this angle

What is the mission \ vision of the organisation

How is that manifested in actual behaviour Percolation factor What is the character of the working

environment Is it supportive, fearful, turbulent

Procedures IT Usage Internet Usage Photographs General PC Access Maintenance and Change Routines Firewalling Management Compliance

Independent verification Division of Duties Internal Audit Fraud Lines & Registers

All investigation: Service, Cost, Expectation

The big savings are in prevention, more than absolute detection

Reducing financial crime: an FSA statutory objective

Insurance industry is not the law. We gather facts

What training do you get\give What protocols are in place to protect e\e’s What do the protocols say about referrals Is it easy or rewarding to refer For those who take the escalation baton: Are you trained in interview techniques Are you aware of DPA constraints How safe are your files and mails

According to the ABI 10% admitted to their last claim being

fraudulent 50% knew ‘someone’ who has committed ins

fraud 63% are thought to have made honest and

truthful new applications for household, motor and holiday insurance

The public believed 41% were completely false. Estimated £1.9bn insurance fraud p.a. £44 per policy is absorbed cost for claims fraud

It’s our job Helps keep claims costs down This has Solvency and Reserving

implications The Regulator says so Right customer signal In theory, honest claimants get through

faster In theory, better resource matching &

allocation

Increased effort & process is costly Is effort rewarded Is outcome measured Information sharing is inadequate Burden of proof is high, so how good is the

work Volume processes present opportunities

Thank You