Archive for July 2011

UK Insurance Fraud On The Rise Despite More Detection!

We’ve predicting it here at Insurance Blog for quite some time and now its official..

Insurance Fraud is on the rise again!

A symptom of every recession, the difference this time is that detection rates of Insurance Fraud are also on the increase, but that doesn’t seem to be bothering those intent on criminal deceit, according to the latest figures released today by the ABI (Association of British Insurers).

They Never Learn!

You could not make it up but some false claimants did.

Insurers are detecting more fraudulent claims than ever: over 2,500 worth £18 million every week

A gymnast with back trouble, a flying toilet roll holder, an invented wedding engagement, a fake photograph and an invisible wall were among the record number of fraudulent insurance claims detected by insurers in 2010, state the ABI.

The figures highlight that in 2010:

• Insurers uncovered 133,000 fraudulent insurance claims – 2,500 every week – up 9% on 2009. The value of these claims was £919 million, also up 9% on the previous year. Over the last five years both the number and overall value of insurance frauds detected have risen by over 100%.
• The most common frauds involved home insurance with 66,000 bogus or exaggerated claims detected, followed by dishonest motor insurance frauds with 40,000 frauds uncovered.

Car Insurance frauds were the most costly, costing the industry £466 million.

• The value of savings from detected frauds represented 5% of all claims, compared to 4% on 2009

Cheats uncovered by insurers include:

• A claim for back injuries apparently sustained from a fall while working in a nightclub was rejected when Facebook images showed the claimant performing gymnastics, and training for a charity run.
• A woman’s claim for facial injuries she said resulted from a falling toilet roll holder in a fast food outlet was rejected when it was shown that the holder would have had to have fallen upwards to cause the injury claimed.
• A man claimed for a ‘lost’ engagement ring. His ex partner said that she was never given a ring as they had never been engaged. On the same day the man said he had suddenly found the ring.
• A claim by a woman for the loss of a £2,000 watch after a night out was rejected when the photograph she provided of her allegedly wearing the watch turned out to be that of a friend.
• A claim for injury said to be caused by falling over a wall was rejected when it was proved that there was no wall at the scene of the alleged incident.

It is estimated that insurance fraud costs £2billion a year, adding, on average, an extra £44 a year to the insurance bill for every UK policyholder.

New National Insurance Fraud Register
Nick Starling, the ABI’s Director of General Insurance and Health, said:

“Insurers are working harder than ever to protect honest customers against fraud. The savings made by weeding out fraudulent claims would otherwise end up being paid for by honest policyholders through higher premiums.

“Fraudsters continually look for new ways to con insurers, so we are upping our game. Early next year we will be setting up a national Insurance Fraud Register, which will contain details of all known insurance cheats. And at the same time the first ever national police insurance fraud investigation unit will begin its operations, making it harder than ever to commit insurance fraud.”

Glen Marr, Director, Insurance Fraud Bureau comments:

“Fraudsters will increasingly find the insurance industry a hostile environment. The IFB is committed to supporting insurer efforts to systematically root out and tackle fraudsters. At the IFB we have access to a significant volume of industry data, use sophisticated and powerful analytical software, work in partnership with insurers, law enforcement and regulators, and have no shortage of reports being received from consumers of their knowledge or suspicions of those concerned with defrauding the industry, through our Cheatline facility.

“We would urge anyone with information on any type of insurance fraud to support industry efforts to root out the fraudsters, by calling the IFB free and confidential Cheatline on 0800 3282550 or by using our online reporting facility at www.insurancefraudbureau.org/report.

Reports to Cheatline can be completely anonymous if necessary. It’s important to underline that some of those concerned with insurance fraud, are also involved in criminal activities where there is harm to local communities”.

Insurance Blog is pleased that when these criminal gangs are caught, their assets will be seized as part of the new Proceeds of Crime Act. Fraud is not a victimless crime and we all pay higher premiums because of it!

Insurance Employees Favourite TV Shows

It was very hot at the office of Insurance Blog today and not the best of working conditions.

However a bit of light relief went around the office with the results of the Insurance company department favourite gameshows of all time poll.

Here are the results in no particular order…….

Insurance All Time Favourite Game Shows

Underwriters – Jeopardy
Loss Adjusters – The Price is Right
Actuaries – 15 to One
Marketing Department – Catchphrase
Claims  – Total Wipeout
Accounts – Double Your Money
New Business – Blind Date
Personnel – Britains Got Talent
Senior Management – Big Brother
Claims Fraud – Give Us a Clue
IT Dept – Eggheads
Call Centre – 100 to 1
Products Department – Take it or Leave it
Risk Assessors – The Weakest Link
Account Executives – In it to Win it

Well its nearly silly season…

If your Insurance company department has a favourite gameshow or even maybe a favourite song, write and let us know at the email address at the bottom of the page……

Insurance Can be Sexy!

Insurance can be sexy! Well in Germany anyway!

The UK has just introduced new bribery laws and one area that could fall foul of this,  is that of corporate entertainment.

Well certainly not in Germany, and especially if you work for Munich Re, one of the worlds largest reinsurance companies who threw an orgy in a spa baths complete with prostitutes for all its major clients and top staff, according to a report on Radio 5 of the BBC!

One of Munich Re’s divisions, Ergo, told the BBC that the party had taken place to reward salesmen in 2007.

A spokesman said the people who organised it had since left.

The gathering was held at a thermal baths in the Hungarian capital Budapest as a reward to particularly successful salesmen.

budapest insurance sex party

‘Whatever they liked’

There were about 100 guests and 20 prostitutes were hired. There was one prostitute for every five guests.

A German business newspaper said the prostitutes had worn colour-coded arm-bands designating their availability, and the women had their arms stamped after each service rendered.

According to Handelsblatt, quoting an unnamed participant, guests were able to take the women to four-poster beds at the spa “and do whatever they liked”.

“After each such encounter the women were stamped on the lower arm in order to keep track of how often each woman was frequented,” the paper quoted the man as saying.

“The women wore red and yellow wrist bands. One lot were hostesses, the others would fulfil your every wish.

“There were also women with white wrist bands. They were reserved for board members and the very best sales reps.”

A spokesman for Ergo told the BBC that the party had happened, but said it was not the usual way of rewarding their employees.

The company said it had introduced a new code of conduct.

“We’ve taken all the right steps to prevent it happening again,” he said. “It was a mistake but we are very sure that it was a unique event.

“The new people of the sales organisation introduced a very personal commitment that these things should not happen again.”

Insurance Blog does not suggest that you approach your marketing director in the morning………

To hear the full interview visit the BBC.

A Brief History of Insurance: Part Six- The First Insurance Company

The World’s First Insurance company -The Fire Office and a man called Halley

In the last article in this series we had arrived at the seventeenth century after a whistle-stop tour of the continuous evolution of insurance across the last 7,000 years or so!

We had just discovered that what is generally regarded as the worlds first ever Insurance company – The Fire Office, was created from the ashes of the Great Fire of London and it is with the Fire Office that we shall continue our journey through the history of insurance….

‘The Fire Office’ was opened by Nicholas Barbon not long after the Great Fire had ravaged some 13,000 homes across the English capital. Barbon himself is acknowledged as being one of the first proponents of the free market and a leading economist and financial speculator of the time – he also had a ruthless eye for a business opportunity.

Predictably as the Fire Office flourished so other companies soon mirrored his business model and a precedent had now been created for insurance to evolve once more. Providing insurance was no longer limited to wealthy private individuals, but instead a developing industry, with dedicated companies establishing specialist commercial insurance and personal insurance products.

This period thus introduced a legacy of professionals who would ultimately establish an insurance industry which would impact upon the lives of almost everyone within the modern world. It is interesting to note that one of The Fire Office’s earliest major competitors was the Sun Fire Office, who, after numerous mergers and acquisitions across the centuries we now know as RSA – one of the worlds largest insurers.

Whilst these early insurance companies actually resembled something more akin to a private fire service (there was no state fire service until 1865), they were soon to develop into far more sophisticated organisations and a large part of this development was made possible by the scientific and more specifically mathematic progress of the time.

As the great fire had swept through London, so through Europe spread an appetite for understanding and a series of extraordinary advances in mathematics established themselves and flourished across Germany, France and England. With them the ability, need and desire to asses and place a valuation on personal risk through more refined, scientific systems also appeared. Economic concepts such as compound interest were re evaluated and revitalised for this modern era where innovative fledgling financial products were rapidly appearing. At the same time more complicated concepts such as probability theory emerged allowing for more sophisticated methods of evaluating risk to appear.

It was through the application of these newly developing mathematic disciplines that London draper John Graunt was able to establish predictable patterns of longevity and death within a defined group of people, regardless of any uncertainty about the future longevity and death of any one individual.

The work that Graunt completed was to become the foundations of an actuarial life table, which is absolutely fundamental to establishing costs for premiums in modern insurance.

However, it was a certain Edmond Halley (yes the same chap that discovered Halley’s comet) who further expanded upon Graunt’s work some thirty years later. Halley was able to demonstrate how to create an insurance scheme to provide life insurance for a group of people, and then calculate with a far greater degree of accuracy than had ever previously been possible, exactly how much each person in the group should contribute to a common fund assumed to earn a fixed rate of interest. Indeed Halley went on to create a life table to calculate the  premium a person of any given age should pay when purchase a life-annuity.

With a business model beginning to establish itself through the development of the Fire Insurers and a new attitude towards assessing risk and applying premiums accordingly being shaped for the first time by complex mathematical theory, insurance was primed to flourish and it soon did.

It was at this point, as the end of the seventeenth century approached, that we see one of the insurance world’s most famous names appear for the first time. In 1688, in Tower Street, London Edward Lloyd opened a coffee shop.

In the next  insurance history article in this series Insurance Blog will reveal how from these relatively humble beginnings his venture went on to become Lloyd’s of London, one of the most powerful organisations in insurance today.