1. A CEO’s Viewpoint. By John Eves BA;MBS;FCCA;FCILA;Fuedi-ELAE Managing Director, Thornton & Partners

2.  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

3. Three Functional Distinctions  Insurance definition suggests fiction or exaggeration  Fidelity Guarantee – e\e fraud, bank & bonds  Transaction Fraud – Stewardship aspect

4.  We are the Response Team, the Reactors  Our actions are governed by the problem presented  Investigative strategy governed by scope of the problem presented

5.  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?

6.  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?

7.  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

8.  “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)

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

10.  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

11.  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

12.  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

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

14.  Independent verification  Division of Duties  Internal Audit  Fraud Lines & Registers  All investigation: Service, Cost, Expectation

15.  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

16.  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

17.  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

18.  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

19.  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

20. Thank You