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Chartered Insurance Institute
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The Insurance Fraud Task Force - the problem and conclusions

CII Thinkpiece no.123

Insurance fraud costs the industry an estimated £3bn a year, plus another estimated £200m a year is spent combatting it. The government's Insurance Fraud Task Force has come up with some solutions.

The Government established the Insurance Fraud Taskforce in January 2015 on the basis of three major concerns: the cost for honest policyholders, the erosion of social cohesion and trust if fraud becomes widespread, and the diversion of the proceeds of fraud to other criminal activity.

The Taskforce made a total of 26 recommendations and a series of advisory comments, all across four broad topics: policyholder understanding and education, the use and reliability of data, the role of regulators and some specific personal injury issues.

There is no simple profile of a fraudster.  However fraudsters normally fall into two broad categories; organised criminals and opportunistic chancers.  There is also a grey area of negotiation, error and misunderstanding which may not be fraudulent but shows many similar characteristics.

We have an evolved privatised supplier market with specialist law firms, claims management companies and medical experts.  An accident, as one consultee described it, has gone from being a misfortune to a business opportunity. 

The Taskforce recognised the importance of ensuring access to justice and that in order to achieve this claimant organisation must earn a reasonable profit in the absence of legal aid.

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