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 2

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 43 rd 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) 4

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 5

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 6

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 7

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 8

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 9

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 drivers 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 11

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 12

BORISS WARNING TO UNINSURED DRIVERSS 13

UNINSURED CARS CRUSHED 14

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