Fraud in Motor Claims Insurance Institute of Bolton – CII 10 October 2017 Presented by Stratos Gatzouris

Introduction Fraud – A voluminous area and topic Discussing motor fraud but is all-pervasive Awareness and gut instinct Own experience How presentation will benefit audience: Adult learners are more interested in a subject if they know how or why it is important to them. Presenter’s level of expertise in the subject: Briefly state your credentials in this area, or explain why participants should listen to you.

Outline Fraud – What is it and extent of the problem Profile of the Fraudster & fraud typology Tools at our disposal – are they threatened? Level of Proof required The ‘Counter’ in Counter-Fraud – Defence, Sanctions & Recoveries Current Reforms – Will they achieve their purpose? Questions Lesson descriptions should be brief.

Learning Objectives What fraud is How insurance fraud is perpetrated The evidential means and hurdles in achieving an effective counter- fraud strategy What the future might hold Example objectives At the end of this lesson, you will be able to: Save files to the team Web server. Move files to different locations on the team Web server. Share files on the team Web server.

Fraud – What is it? Fraud Act 2006 - common law conspiracy offence retained - created general offence of fraud – 4 ways of committing it: i) fraud by false representation ii) fraud by failing to disclose information iii)fraud by abuse of position iv)possession or control of articles for use in fraud - Element of dishonesty & intention to gain or cause loss (except iv) Criminal and Civil law implications

Extent of the Problem ABI 2014 stats in respect of 2013: - 130,000 cases of detected insurance fraud - combined value of £1.32billion - 3% increase in value cf to 2013 - £837m related to motor fraud (67,000 detected) IFB crash for cash hotspots, 2017 General trends – wider spread, less occurrences, greater value

Extent of the Problem – cont. Costing & Profit Margin Example for Staged Accident (average case with 2 cars loaded) Buy 2 written off cars: £3,000 Pay offs & expenses: £1,000 Total cost: £4,000 Reward: Vehicles: £ 3,000 Storage & Recovery: £ 500 Credit Hire: £ 7,000 Miscellaneous / Physio: £ 2,000 7 PI Claims: £20,000 Costs: £12,500 Total monies received: £45,000 – Profit of >£40K! NB – Assumes some cases settled pre-proceedings, based on fixed costs and none have gone to trial – A Profitable business Could be far worse – Taxis, hire cars, buses, fraud rings, Larger value cases

Profile of a Fraudster What does it take? The opportunist, the exaggerator, the criminal Motor Fraud: - Staged (occurred but orchestrated) – Indicators? - Contrived (orchestrated) - Induced / Slam-ons (praying on the innocent, cash for crash) - Bogus / Phantom Passengers - Exaggeration, Fraudulent Credit Hire, LSI - Or a combination of some of the above! Extends to other areas e.g. Liability, NIHL, Health, holiday sickness, First Party (theft / burglary, fire, income protection, travel, life insurance etc.)

Tools at our Disposal Intelligence – open source data e.g. Voters Roll, DVLA Insurance data – MIAFTR, CUE, Past claims / data-bases, Insurance Proposals, IFIG, DPA requests Secondary investigations: taxi licensing, weather, route feasibility, telematics, phone records, medical records, police reports, ANPR, dash- cam, CCTV Witness Evidence and credibility Forensic Evidence (engineering) Looking for: Inconsistency, lack of credibility, non-feasibility

Level of Proof Required Criminal: Beyond Reasonable doubt Civil: - On balance of probabilities - Concept of Fundamental Dishonesty – used in 2 contexts: i) Costs exception to qualified one way costs shifting ii) S57 Criminal Justice and Courts Act 2015 - What is the aim? Claimant has to prove accident occurred and loss suffered but Defence has to raise these issues e.g. Staged accident Underlying theme: credibility

Level of Proof required – cont. Consider: Fraud & Liability Fraud & damages Fraud & causation Fraud & indemnity

The ‘Counter’ in Counter-fraud Defence & technical knock-out Discontinuance Costs (fundamental dishonesty, non-party costs) Strike out in terms of S57 Criminal Justice & Courts Act Counter-claim Damages (tort of deceit & exemplary) General Enforcement Contempt of Court & other criminal action Private Prosecutions Role of IFB, IFED, IFR, Fraud Taskforce, Regulation of CMCs, Medco Publicity!

Current Reforms Whiplash related Fixing damages awards Increasing Small Claims Track Seeking to discourage minor/frivolous claims and take costs out of the system

The Future What about fraud in future? Consider: - Case of Vnuk – accidents anywhere, on any type of ‘vehicle’. - Large scale fraud e.g. buses, fraud rings - Exaggeration - Litigants in Person and ‘professional’ McKenzie friends - Potential un-controlled activity from CMCs - Application fraud - Driverless Cars – Cyber, car theft - Artificial Intelligence - Other types of fraud Will Fraud go away / increase / decrease? What do you think?

Questions?

Thank You! Stratos Gatzouris sgatzouris@virginmedia.com 07714 775 284