CHALLENGES IN MOTOR … FRAUD, DRIVER CONTROL AND UNINSURANCE

Muzaffer Aktas

3 March 2013

Fraud, fraud, fraud

Systemic claimant fraud

Occasional claimant fraud

Disability fraud

Solicitor fraud

Police fraud

Insurer employee fraud

Whiplash fraud

… … the problem has many forms

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Systemic claimant fraud

Physical damage to the vehicle …

– The written off car gets resold after repair

– The damage is badly exaggerated

– The same car is claimed against many insurers

– And many more …

Personal injury can be created …

– Mrs A hits Mr B for a whiplash loss, Mrs B then hits Mr A

– One UK driver kept braking abruptly at the same roundabout to create a whiplash outcome – “real” accidents … only after 43rd “accident” did an employee in the office next to the roundabout notice & report the fraud 3

Occasional claimant fraud

This is less of a problem as regards scale (it is the systemic approaches that are used by criminal gangs)

Nevertheless there is extensive levels of fraud where the person involved in an accident opportunistically sees the chance to make a fraudulent claim

– Faking injury (especially whiplash)

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Disability fraud

Where the claimant suffers modest permanent disability, it is easy for the claimant to collude with the consulting doctor and pay an extra sum to ensure that the doctor certifies a high level of disability

The problem can happen even without a payment – the doctor may simply want to help a pleasant person or the doctor may dislike insurers

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Solicitor fraud

In Kenya there are many cases where the solicitor visits the hospital near the scene of a coach or bus disaster

All those injured in the coach accident have their names taken

So does anyone else being treated that day

Sometimes over 120 claimants have been claimed as riding on buses with maximum 38 seat capacity

Many “claimants” have no idea that money is being collected “for them” … the solicitor collects the claim cheque but is very slow to distribute the proceeds

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Police fraud

Regrettably there is scope for the police officer at the scene of an accident to accept money in exchange for making the accident report

Especially if the injured party was actually at fault, it suits that person to ensure that the police reports shows the other vehicle was at fault

Where bus or coach accidents are concerned, any encouragement to the police to help claimants is likely to be appreciated

Police can collude with drivers to avoid road tax, insurance etc

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Insurer employee fraud

It is all too easy for an insurer employee to collude with a repair shop to authorise more-expensive-than-needed repairs

A private relationship between the repair shop and the employee can “make it all worthwhile”

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Whiplash fraud

This has been mentioned … but the scale it can grow to is amazing

UK medical treatment costs for whiplash are about £8 million annually

UK insurer payments for TP motor whiplash claims are nearly £2 billion annually

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How to control fraud

Each market must create a Fraud unit

Success in many countries – see e.g. Turkey example

Checking of e.g.

– Claims close to policy start dates

– Claims occurring after midnight with no witnesses

– Large value “hit and run” losses

– Large value car “thefts”

– Policies with high frequencies of claims (Jordan has an example with 83 claims in a single policy year)

Amend the law to exclude compensation for injury that cannot be proved objectively (e.g. no whiplash) 10

Driver control

Related to fraud control is the need for driver control

Driving tests are often too easy to pass

Some countries permit many breaches of road laws before a driver’s licence is withdrawn

– A points-based system works best with e.g. 4 speeding fines in 3 years being enough to trigger licence loss

Tough responses to drink-driving or drug-driving need to be in force

The penalty for being uninsured needs to be material

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Uninsurance

Major problem in some markets

– Example – Vietnam, where over 20% of cars and over 70% of motorbikes are not insured. Bikes form 96% of the national vehicle count

Police are often reluctant to co-operate in controlling uninsurance (manpower issue)

Extreme deterrents can be applied – in the UK over 150,000 vehicles and bikes have been crushed, after due warning, due to having no valid insurance certificate

Must cost more to be uninsured than to buy the insurance

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BORIS’S WARNING TO UNINSURED DRIVERSS

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UNINSURED CARS CRUSHED

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Day 251 - West Midlands Police - Uninsured Car Crushed

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