Episode 7 - Part 1
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Welcome to Risk Matters, the insurance podcast brought to you by DWF and your
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global guide to the latest trends and issues in the insurance and reinsurance industry.
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Join us as we explore topical issues, emerging technologies and the innovative
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strategies that are shaping the global future of insurance.
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Welcome to Risk Matters, the insurance podcast from DWF.
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Today we will be talking about tackling insurance fraud in Europe.
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My name is Lorraine Caroline. I'm the Global Head of Fraud at DWF and I'm delighted
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to be joined today by Ben McBean,
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who is the Assistant Claims Manager for QBE International and a key member of
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QBE's multi-award winning Special Investigations Unit.
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Also, Romain Dupre, a partner at DWF in France, and Endre Malley,
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an associate of DWF in Italy.
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So turning to our first question, and I'll put this to you, Ben,
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what are the main fraud risks and trends currently observed in Europe?
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Hi, thanks for having me today. One of the things that we find is a major issue
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at the moment is to do with synthetic identities,
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so where criminals are utilising aspects of a genuine person's identity and
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trying to use that as part of setting up a claim or a policy.
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So they'll make documents such as driving licences and that sort of thing to
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make a fraudulent claim.
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We're also seeing issues with commercial entities
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that are being utilised by organised criminal
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gangs so where you don't
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have a lot of transparency around corporate structures
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it's really difficult to identify when
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there's a problem so there's instances
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such as cargo fraud and theft
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of plants and cargo and that sort of thing they're utilising false entities
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that are being created specifically for creating the fraud so that's a major
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problem at the moment Thanks Ben, same question to you Roman.
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Bonjour Lorraine Very happy to be with you today.
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I think as a general matter, I would say that the French market is not as mature
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as the market in the UK in fighting insurance fraud.
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So there is a tendency by
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many interests to be more careful now because
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there has been a witness of encountering more fraud recently and that's true
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in many different markets that's true for construction I'll come back to that
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later for the car and motor industry and as well as the marine claims I would say,
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And over to you, Andre.
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As Roman said, in Italy, the market is even less mature than France with respect to insurance fraud.
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And when discussing insurance fraud in Italy, the focus tends to be on the motor sectors.
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These for two main reasons. The first one is that we have official data only
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in respect with motor third-party insurance liability.
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And the other one is that motor sector accounts for 70% of the fraudulent claims in Italy.
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However, in the most recent years, we are facing an increase across all the
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different lines of business.
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For example, life, personal injury, theft, transport, medical malpractice.
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And another quite concerning aspect that also Ben was highlighting is that the criminals gang,
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organized gangs, are showing more and increasing interest in insurance fraud activities. Thank you.
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Ben, what are the most common types of insurance fraud seen in your market and
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can you share any examples?
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If I look at the types of things that I see the most, I see a lot of opportunistic fraud in Ireland.
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People making personal injury claims that are exaggerating the extent of the
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injury. So there's quite a lot of that in Ireland.
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From an organised perspective, as I mentioned, the challenges around cargo fraud,
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people using false identities to get into the supply chain.
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There's also construction people involved in stealing plant,
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potentially for it to be taken to Ukraine, Gaza those sort of places,
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we also see instances of
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stage thefts in hotels whether
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it's criminal gangs who are operating in a hotel to steal the belongings of
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genuine people or also using alleged thefts as ways in which they can mask money laundering.
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They'll say that they had a certain amount of money and...
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Expensive possessions stolen so they can make a claim, which then turns their
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dirty money into clean money as well.
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So there's quite a variety of things that are going on in Europe that I see.
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Indeed. And passing over to Italy, Andre, same question.
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Well, in Italy, I would say that the most common type of insurance fraud are
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in the modern sector, and they typically occur in high-frequency, low-value cases.
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As I was saying before, as I mentioned before, we have seen an increase in the
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recent year in other kind of businesses, especially personal injury and road accidents,
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property damage, and vehicle theft, which are quite expanding in the recent years.
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And I would like to share you an example of insurance fraud claims that grabbed
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the headlines of the leading Italian newspapers.
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Because quite recently, in
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2019, a criminal organization, which was composed of at least 34 members,
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was specialized in insurance fraud carried out through the mutilation,
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the deliberate mutilation of claims of compliant victims. And it was a very important thing.
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And this is an example that I want to share because it is one of the first times
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that an insurance fraud activity had been dealt with also by the national newspapers.
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Because as I mentioned before, in Italy, our market is not as mature as it is in the UK and in France.
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We have also many cultural aspects involved in this.
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So it is important for Italy that fraudulent activities are advised.
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So as I was saying also before, this is an aspect which is quite relevant because
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we do not want criminal organization and gang members to put their hands also
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on insurance fraud activities because they have almost unlimited access to money,
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to artificial intelligence technologies,
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Over to you in France, Roman.
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One of the most common areas for insurance fraud is the construction industry.
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As I mentioned, in France, construction companies need to have a number of mandatory
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coverages to carry out their activities.
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For example, decennial warranty or the coverage of reimbursement of advances, etc.
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And when some of these businesses cannot find this kind of coverage,
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they tend to forge insurance certificates, either to use certificates they had
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in the past or to use third-party insurance certificates to pretend they still
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do benefit from this mandatory coverage.
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So that's a kind of case where I can turn on a weekly basis for our clients here.
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So the construction industry is really very exposed to insurance fraud.
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I would say there is another sector which deserves specific attention,
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which is insurance intermediaries, because in a number of cases,
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insurance intermediaries are not very transparent on the information they receive
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from the insured and do not always transfer them accurately to the insurance.
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And try in the meantime to make money on the premium or to take commitments
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that insurers are not aware of.
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Ben, we all know that data is so important to detection of fraud.
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How comprehensive is the data on insurance fraud in your jurisdiction?
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For which insurance lines is data collected? And do you think there's more that
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we can be doing in this area?
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Yeah, I think if you look at the data that we get from the IFB.
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There's quite a lot of data around certain lines.
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So you get a lot of data around motor accidents, casualty claims,
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property, a bit on travel and that sort of thing.
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But generally, I think data is quite poor when it comes to commercial lines
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of business and particularly cross-jurisdictional data as well.
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It's quite hard to get data when exposures are in other jurisdictions,
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and particularly with specialist lines of business as well.
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So if you're looking at marine or something like that, it's very difficult to get that data.
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So there could be a lot more done there.
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And I think one area that was highlighted recently when I was listening to the Lamptience podcast.
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They were trying to do an evaluation of the trend
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of EV thefts and comparing
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that to other vehicles and seeing why it might be different but the problem
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they had was that there just wasn't the quality of the data there even though
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it was a motor line of business they still didn't have the data So I think there's
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an awful lot that needs to be done in that regard.
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And it's interesting that you say that, you know, it's in the mainstream,
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sort of the property casualty motor areas that we've come on an awful lot with
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the collection of data, but not so much in the commercial lines.
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Over to Roman, where is France in all of this?
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I think in the UK, the overall amount of fraud is about 5 billion, right?
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So the amount of identified frauds, if I'm correct, Lorraine or Ben.
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I think in France, the latest data we have come from the Alpha,
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the Association for Fighting Intrance Fraud.
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It dates back to 2024.
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And according to them, the total amount of fraud in France was 900 million euros.
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Including $650 million for casualty and property, and the rest of it,
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about $250 million for life insurance and health insurance.
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So it leads me to believe that the data in France is not totally accurate because
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I can't see that the amount of
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fraud in the UK could be five times more important than it is in France,
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and there's still a huge challenge in trying to collect the data.
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Another interesting data I came across was the data from Belgium in which fraud
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went up from 6,000 to 7,000 cases according to Asuralia, the Belgian Insurance Association.
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So I think the rise in insurance fraud is not specific to one jurisdiction in
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continental Europe, but it's a more general trend.
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And according to the French Insurer Association, that would represent about
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3% to 4% of the amount of the indemnities paid over a year.
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And Roman, can I stay with you on that? Because you talked about,
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you know, the data may not be accurate.
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And that's obviously a very big challenge. So what are the challenges around
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collecting and sharing the fraud data across Europe and the UK?
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I think the system for going after fraud is very different in each jurisdiction.
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So that's why it has impact on the overall view you can have on the data in this respect.
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You tell me what is it in the UK, in France, you have to file a criminal complaint,
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for example, if you have identified an insurance fraud.
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And until very recently, this was a quite formalistic process.
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So many of the insurers didn't want to go through that process for each case
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they identified so that's why we have a whole part which is actually below the radar.
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And actually according to new reforms you can now file a criminal complaint
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online and I'm hopeful that it will help the process for insurers to actually
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raise issues in relation to fraud and also to have more digitalized data to
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dig through in the future.
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So if you have many, many different data about fraud, for example,
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you can see that it affects more regions than another specific category of vehicle, as Ben mentioned.
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And that would indeed help after that in having a red flag at the time of managing losses, etc.
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And Ben, any views or observations on what Roman's just said? Yeah, absolutely.
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I think fundamentally the issue is that if you don't have the data,
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then the legislators don't understand the extent of the problem and therefore
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not give sufficient priority to different legislation or strategies to deal with insurance fraud.
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So this area is really important.
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And one of the things that's been mentioned, I think, is in relation to the
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way in which data is captured.
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So in England and Wales, we can provide data on suspected fraudsters.
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We can have proven fraud, but proven fraud might be different to proven fraud in France.
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So when you're looking at sharing data, one of the problems is around the uniformity of the data.
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So are you measuring fraud by the same yardstick?
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Are you calling it the same names exaggeration or staged or what have you do,
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Are you able to compare it like for like because it's measured in the same way?
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But I think until we're able to capture that type of data, I don't think that
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the full extent of fraud in the UK and Europe will be fully understood.
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Agreed. And Andre, what's your view from Italy?
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I wanted just to add something about this because I think the real key point
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of all this discussion is the gathering of data, as Ben and Roman were saying.
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And a problem that we're facing in Italy is that insurance companies are currently
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highly investing on advanced tools, so intelligence, artificial intelligence.
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But if we do not have uniform datas and good quality datas, also these investments
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have no real impacts on counter-fraud activities.
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So I think this is the key point that we must.
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Advertise in the coming years at an international level, not just at a national level.
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And Ben, do you think that it's going to be possible to have that uniformity
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across all jurisdictions?
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I think at the moment, probably not.
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As I say, I don't think that different countries
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um possibly appreciate the
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extent of fraud and how it's impacting customers
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um so yeah it's
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quite tricky like i said it's a bit of a catch-22 um um
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you need to um try and explain the problem but you don't have the data to do
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it but yeah it's very tricky but um i think there's a lot of will um when you
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speak to different insurers in different countries um people are work in our
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field in fraud detection.
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Everyone's got the will to work together and to do something about it.
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So hopefully that means that we will get a bit closer to joining up a bit more in that regard.
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And staying with your point. Apologies, Lorraine. In this respect,
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there is a very interesting recent survey conducted by ANIA in Italy.
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We show that 72% of respondents here in Italy believe that there is no correlation
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between the insurance premium that they pay and fraud.
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So only 50% of respondents understands that the honest policyholders are paying
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also for those who defraud insurance companies.
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So just to give you some numbers and an idea of the differences between countries,
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I think in the UK the numbers are.
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Very, very different from the ones I just showed you.
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So this to me confirms that there
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is still much to do to have uniform data between different countries.
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Yeah, agreed. And just picking up on the point about sort of impact and regulatory
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impact on fraud detection and collaboration,
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How do the GDPR and data protection regulations, in your view,
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impact the detection and collaboration in your jurisdictions?
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And I'll go to Romain first in France.
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So there is an obvious contradiction between the rules on the protection of
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personal data and the need to process all this data by insurance to fight fraud.
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Actually, in France, it was handled by way of a decision of the CNIL,
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the authority in charge of overseeing rules on data protection,
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quite a long time ago, because it was in 2014 that the CNIL issued an opinion
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actually classifying the fight against insurance fraud as a legitimate purpose
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for processing personal data.
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So there is a legal basis for insurers to actually process personal data they
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collect to make sure they are efficiently fighting insurance fraud.
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Of course, this is subject to a number of coverets and rules and restrictions,
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but they are allowed, for example, to cross-reference their different databases,
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etc., and to create actually a list of suspicious insurers on the basis of this regulation.
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So there is a way for insurers to use this, of course, with some regulatory framework.
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And Ben, in your view…,
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Yeah, I think from an outsider's perspective,
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it seems to me like even though GDPR comes from the same European directives,
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we've all applied it seemingly quite differently in the way that it's actually
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utilised in day-to-day life.
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When you look at it, a lot of them read the same,
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but it seems culturally there's a lot more reticence to investigate who an individual
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might be or that sort of thing because of a fear maybe of an information commissioner.
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I think it was quite useful in the UK that we had a note from our Information
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Commissioner to remind people that they are allowed to investigate entities
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for prevention of fraud.
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Um so that was really good but there are
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jurisdictions that i see where um even the the basic kyc checks are difficult
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because they're concerned about um infringing somebody's uh personal rights
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when in fact also you you are protecting customers by by doing that and i think um.
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I dare say in the UK, I think we've got a really good balance there.
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I don't feel like we have our hands tied when we're trying to investigate thoroughly,
00:22:30.601 --> 00:22:35.021
but still we are reminded of our responsibility to protect our customers' data as well.
00:22:35.201 --> 00:22:40.021
So unless we're able to get past that, I think it really hinders the ability
00:22:40.021 --> 00:22:45.521
to properly investigate and also share data. So it's quite a big problem.
00:22:46.481 --> 00:22:49.761
Andre, your view from the Italian perspective?
00:22:49.761 --> 00:22:52.821
From an italian perspective i feel
00:22:52.821 --> 00:22:55.681
like we have not the same balance that ben
00:22:55.681 --> 00:22:58.581
was talking about when referring to to
00:22:58.581 --> 00:23:01.681
the uk because actually the italian guarantor
00:23:01.681 --> 00:23:09.061
of privacy is interpreting and applying the gdpr in quite a strictly way and
00:23:09.061 --> 00:23:14.521
in my view these the constraints are directly affecting fraud detection in italy
00:23:14.521 --> 00:23:20.641
we have data minimization we have purpose limitation We have further retention limits.
00:23:21.801 --> 00:23:28.061
And for a country like Italy, which, let me say, has not such a culture,
00:23:28.441 --> 00:23:34.241
such an experience when it comes to counter fraud, this is quite, quite limiting.
00:23:34.741 --> 00:23:39.601
So I think also from a legal and legislative perspective, there is much more
00:23:39.601 --> 00:23:42.881
to do in our country in the coming years.
00:23:42.881 --> 00:23:47.881
Of course, there are also European concerns, so it does not depend so lately
00:23:47.881 --> 00:23:52.681
on Italy, but I think this is one of the further key points that we will have
00:23:52.681 --> 00:23:54.721
to work on in the upcoming years.
00:23:55.901 --> 00:23:59.661
Thank you for listening to Risk Matters, the DWF insurance podcast.
00:24:00.041 --> 00:24:03.321
We hope you join us again soon for future podcasts in our series.
Episode 7 - Part 2
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Welcome to Risk Matters, the insurance podcast brought to you by DWF and your
00:00:04.037 --> 00:00:07.897
global guide to the latest trends and issues in the insurance and reinsurance industry.
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Join us as we explore topical issues, emerging technologies,
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and the innovative strategies that are shaping the global future of insurance.
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Moving to detection of fraud now, which is all important, of course, in terms of what we do.
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What detection tools and technologies are being used to combat insurance fraud
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in Europe? And how effective are they?
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I'll ask this of Romain, if I can, in France.
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I think we are still at a quite early stage of this whole detection process.
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But it's moving on quite quickly because
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at first once again I come back to
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the role of Alpha which is quite pivotal in all
00:00:59.037 --> 00:01:03.917
this fight against insurance fraud in France and Alpha has created a platform
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which is now also an application in which all the fraud referrals and officers
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in each of the 340 members they can share information on suspicion of fraud for example.
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So that was the first seed, I would say, of the way insurers collaborated to
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try to share information on insurance fraud.
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But of course, that needs to be now also put into perspective with other tools
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and artificial intelligence tools.
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And that's very much an important subject at the moment.
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For example, in Les Echos, I don't know if you know Les Echos,
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but that is the one French economical magazine.
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There was an article last Friday,
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three days ago, on AI. How does it help insurance to go after fraudsters?
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It was very interesting of Mr. Jawish, who is the director of Shift,
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which was, of course, a pioneer company in terms of giving tools to insurance
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to go after insurance fraud.
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But I'm sure Ben knows that better than I do, probably.
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I hope I do. Yeah.
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I think, like Remain's pointing to, the important thing is automation.
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It's extremely difficult to rely upon old strategies or manually going through
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a file, trying to pick things out just from a human's eye.
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When you're looking at documents for example it's so easy for fraudsters to
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generate false documents that look realistic,
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so you need some sort of automated tool that can identify these documents and
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they are available to insurers but if you think of the millions of documents
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and emails that are processed there's no possible way that you'd find it manually so yeah,
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Yeah, automated document validations, important.
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Also, probably automated corporate entity screening as well.
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Again, there's that many entities there.
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You couldn't possibly do it manually. And if you've ever tried to investigate
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one of these complex corporate structures, it can take you a full day to go
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through the whole thing.
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And when you've got quite a few claims on your desk,
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it's very difficult to do remember pointing to Shift.
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Again having tools like Shift that
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learn what fraud looks like from
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your stock of claims that's something else that is really important because
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you can't always see what's coming next and where a system is learning what
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fraud looks like It helps you
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to spot the next thing and be a bit more proactive instead of reactive.
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So that's really good. And yeah, I think the automation part is the important aspect to this.
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Andre, from the Italian perspective? Yeah, I think that Ruman and Ben said everything,
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but just to add in some numbers from an Italian perspective,
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According to an article by Deloitte, by 2026,
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over 83% of Italian insurance companies are expected to deploy generative AI tools,
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which is quite an interesting number because it shows that also in Italy,
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there is more attention to insurance frauds.
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But again I want to, I don't know if Roman and Ben agree with me on this but
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I think that until we have uniform data and good quality data,
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the investments in tools are not enough to tackle insurance fraud.
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Also because especially organized gangs are investing themselves a lot of money,
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a lot of financials in the AI tools.
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So I think until we have the data, if we do not find a way to tackle insurance
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fraud as a unit together, I think it will be very, very hard.
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Ben, any observations on that? I think as an insurer, when you're trying to
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get your business case across to a decision maker to say, right,
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we need an automated tool and this is the benefit it's going to bring.
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It's hard to do that if you don't have a broader picture of what fraud looks like so,
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yeah even from the perspective of trying to get investment you need to understand
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the scale of the problem as well so but yeah you,
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I think the first thing we learn when we investigate fraud is that investigation
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in silos isn't as effective as collaboration with others.
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So, yeah, there's quite a lot to be said for that. It's the fraudster's paradise,
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isn't it, acting in silos.
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Shall we move to the legal framework in the respective countries?
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So, Roman, how does the legal framework in France support or hinder the fight
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against insurance fraud? and what avenues do you have available to you to support you?
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That's a good question because once you have gathered the data and actually
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processed them and identified a fraudster, you need to know what to do about it.
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And there are two avenues in France to go after fraud. One is a criminal avenue.
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As I mentioned, it's probably quite specific to France or relatively different than the UK.
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Is that the insurer, they can file a complaint with a general prosecutor to
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bring the matter to the attention of the prosecutor.
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And this is something we do every week.
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So we put forward forged documents and the fraudulent scheme.
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And then it is for the prosecutor to investigate, to hear the party,
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to hear the third party which claims benefit of the insurance, the intermediary, etc.
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And then it is for the general prosecutor to decide whether or not to refer
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the matter to a criminal court.
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I think in the UK you can directly put the criminal action in motion.
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This is not the case in France where you have this filter of the general prosecutor.
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Sorry, Roman, it's the same in Italy.
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Yeah, I guess sometimes we have to file the complaint.
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Yeah, we have to file the complaint and then it's to the general prosecutor
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to go ahead with investigations.
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And I think there is no specific crime for entrance fraud in France.
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So you have to base your argument on the general fraud qualification or, of course, forgery.
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That's subject to five years of imprisonment and €325,000 fine.
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One of the difficulties we encountered
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is that we have not as many prosecutors as we should in France.
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And they handle generally everything from, you know, theft of a car to bodily
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injuries to fight to riots and stuff.
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So one of our big job as an industry is to make them aware of the importance of insurance fraud,
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to have them interested in this kind of matters because otherwise we just file
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the complaints and sometimes it goes down the pile of things they have to do.
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So that's really something we should collectively work on.
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Just one quick word on the civil commercial aspect of things.
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Under French law, if you can prove fraud, of course you can deny coverage,
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but the insurer can also keep the premium even for the uncovered period after
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the insurance is terminated,
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which is a very rare case legally speaking of private fine under French law
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because the insurer can keep the benefits of the policy even though the contract is null and void.
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And Andre, in Italy, anything to add or any observations on what Roman's just said?
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Allow me to thank Roman because he did make also my job. So he said everything.
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Also with respect to Italy, as I was saying, it is very similar.
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Also the convictions here in Italy, we have a specific crime,
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which is a section 624, which is for insurance fraud.
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And also the convictions are quite similar because here in Italy there is imprisonment
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which may go from one to five years.
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So it's quite similar. Also the commercial venues and tools are the same.
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With respect to the effectiveness of these venues, I will say that the data gaps,
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the slow technological uptakes and the limited legal specialization that we
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have in Italy makes it very difficult for our legal framework to be effective.
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We took part to an internal event of ANIA which is, as I said before,
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the Italian Association of Insurance Companies and they
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were stressing out the fact that here in Italy there are
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very few lawyers specialized in fraud
00:11:09.169 --> 00:11:12.429
activities and this again shows
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how here in Italy there is not that
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much of a culture of insurance fraud like
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there is in the in the uk but i
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think we are we are improving also also in
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this respect also using the the example of the of the uk so over to you ben
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right um it's like an exam question almost it's uh um yeah there's quite a lot
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of avenues uh available um in england wales in particular um.
00:11:45.564 --> 00:11:50.104
And I think it's important because if you look at the numbers,
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so I think the ABI in the last report said that members identified about 80,000
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cases of insurance fraud.
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And then if you think about, say, the Metropolitan Police, they investigate
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800,000 cases a year, and our prison system has a capacity of 80,000.
00:12:11.084 --> 00:12:20.644
So if every case had to be prosecuted, it'd be a tenth of the Metropolitan Police's entire caseload.
00:12:20.924 --> 00:12:27.904
And also we'd double the prison population as well, which is quite an acute
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issue right at this point in time.
00:12:30.144 --> 00:12:36.484
So I think in England and Wales it is important we utilise a lot of the things
00:12:36.484 --> 00:12:42.804
we have at our hands so we can plead fundamental dishonesty,
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which means that if the fraud is proven civilly then the entire claim goes away.
00:12:50.104 --> 00:12:52.944
You can allege contempt of court,
00:12:53.904 --> 00:12:59.924
which could lead to a prison sentence and that's still in the civil area as
00:12:59.924 --> 00:13:08.024
such you can bring a private prosecution for attempted fraud you can bring a claim for tort of deceit.
00:13:09.344 --> 00:13:15.784
And then there's other aspects such as referring the case to IFED so the City
00:13:15.784 --> 00:13:17.744
of London Police which is specifically for,
00:13:18.564 --> 00:13:24.324
insurance fraud, but then there's a capacity issue there, so I think in the
00:13:24.324 --> 00:13:28.244
last 12 years they've probably arrested 3,000 people,
00:13:28.544 --> 00:13:34.944
so I think they're good at what they do, but the scale of it isn't big enough
00:13:34.944 --> 00:13:37.244
if you were going to refer all fraudulent claims.
00:13:38.324 --> 00:13:42.184
And then, on the other hand, we have the ability to...
00:13:43.782 --> 00:13:50.782
Deal with a fraudster in whichever way that might be, but also add them to insurance fraud register as well.
00:13:50.902 --> 00:14:00.302
So that's another way in which you can make sure that there is some form of punishment and such.
00:14:01.122 --> 00:14:05.202
And it means that it's less likely that they'll commit fraud again.
00:14:05.502 --> 00:14:11.522
So I think unless you have quite a range of options, I think it might be quite
00:14:11.522 --> 00:14:17.322
difficult to deal with the extent of fraud that happens in each country.
00:14:17.602 --> 00:14:24.282
Indeed, and it does feel that a huge part of bringing all of those areas into
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play has been collaboration in the industry.
00:14:28.382 --> 00:14:32.562
Whether that's between insurers, authorities, associations.
00:14:32.562 --> 00:14:39.202
So looking at the part that everyone has to play in the role in highlighting
00:14:39.202 --> 00:14:45.802
fraud and being able to detect and tackle, what is the role that collaboration plays?
00:14:46.022 --> 00:14:47.762
I'll ask you, Ben. Yeah.
00:14:49.273 --> 00:14:56.693
I think at a higher level, it's trying to engage with governments so that they
00:14:56.693 --> 00:15:02.453
can understand what we're faced with and how we're trying to protect our customers.
00:15:03.533 --> 00:15:10.113
It's only then that you're going to get support to bring in different legislation
00:15:10.113 --> 00:15:19.013
that deals with fundamental dishonesty or support to allow us to utilise things
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like an insurance fraud register.
00:15:21.753 --> 00:15:27.633
And then bringing in other legislation like the Economic Crime and Corporate
00:15:27.633 --> 00:15:33.673
Transparency Act, which I think has been really beneficial to England and Wales,
00:15:33.793 --> 00:15:38.473
given that our company's register was unvalidated.
00:15:38.473 --> 00:15:42.153
Validated so it kind of gave frauds
00:15:42.153 --> 00:15:46.173
to some sort of uh legitimacy when
00:15:46.173 --> 00:15:52.673
presenting um whatever it might be a claim or something um and and things like
00:15:52.673 --> 00:15:57.253
that have only come in with that collaboration with government um and then the
00:15:57.253 --> 00:16:03.393
other side of it is if you look at organizations like the ifb um it's it's,
00:16:04.280 --> 00:16:11.860
It's trying to encourage more people to collaborate in their strategies to understand
00:16:11.860 --> 00:16:18.020
what the current trends look like so people can focus their efforts and share
00:16:18.020 --> 00:16:23.500
in the data because a lot of these claims that are organized,
00:16:23.500 --> 00:16:28.120
we're not going to be able to identify the organized nature of them unless we're
00:16:28.120 --> 00:16:30.860
finding out from other people that they're also exposed to it.
00:16:30.860 --> 00:16:38.500
So, yeah, it's really important and you probably can't emphasize it enough, to be honest.
00:16:39.180 --> 00:16:43.160
And Andre, your view in Italy on the collaboration in the industry?
00:16:44.860 --> 00:16:51.320
Quite recently, Ivas has been pushing insurance companies in this direction.
00:16:51.320 --> 00:16:54.780
Also Ania has multiple
00:16:54.780 --> 00:16:57.480
times highlighted how important it is
00:16:57.480 --> 00:17:01.820
that insurance companies cooperate between each
00:17:01.820 --> 00:17:04.920
other and in Italy once again there
00:17:04.920 --> 00:17:08.040
is also a cultural aspect that we
00:17:08.040 --> 00:17:11.160
have to deal with because what
00:17:11.160 --> 00:17:17.820
we have seen from our experience is that some insurance company are quite reluctant
00:17:17.820 --> 00:17:24.340
with sharing their datas because they are afraid that these datas may show their
00:17:24.340 --> 00:17:29.240
vulnerabilities or even worse may benefit competitors.
00:17:29.620 --> 00:17:35.600
So I think that when discussing insurance fraud we must abandon this,
00:17:35.600 --> 00:17:38.400
let me say, individualistic view.
00:17:38.660 --> 00:17:41.880
We have to cooperate to solve this
00:17:41.880 --> 00:17:48.800
problem which is affecting in fact all the insurance companies and now all the
00:17:48.800 --> 00:17:55.120
lines of business because in Italy until let's say 10 years ago it was mainly
00:17:55.120 --> 00:18:00.600
an issue for insurance companies dealing with the motor sector.
00:18:01.499 --> 00:18:08.139
While now it is an issue for all insurance companies, for all the lines of business.
00:18:08.971 --> 00:18:13.011
So personal injury, medical malpractice, property, HAL, marine.
00:18:13.251 --> 00:18:16.811
So I think the need of cooperation is essential.
00:18:17.131 --> 00:18:21.891
I think if I can jump on to that as well, the other aspect as well is where
00:18:21.891 --> 00:18:30.371
something will change in one country and fraudsters will jurisdiction shop and
00:18:30.371 --> 00:18:32.151
see which area will help them.
00:18:32.151 --> 00:18:38.791
So, as I mentioned, the corporate transparency legislation that came in,
00:18:38.991 --> 00:18:45.911
that's meaning that it's a lot harder for criminals to set up a fake company in the UK now.
00:18:46.251 --> 00:18:50.571
So, they're now going to be looking at other countries that are potentially
00:18:50.571 --> 00:18:56.451
a bit softer, maybe, and so they can establish that enterprise.
00:18:56.731 --> 00:19:01.271
So, yeah, it might be Spain, Italy, or somewhere like that.
00:19:01.271 --> 00:19:08.851
So unless we actually collaborate and work together on these particular areas,
00:19:08.851 --> 00:19:16.011
then it's going to be a forever circle of trying to block the gaps where legislation
00:19:16.011 --> 00:19:17.931
hasn't covered everything off in each country.
00:19:19.131 --> 00:19:23.471
And bringing Romain in on France, collaboration and its importance.
00:19:23.871 --> 00:19:28.871
So how does the expression go? It needs a network to fight a network.
00:19:28.871 --> 00:19:32.111
So I think indeed collaboration is very important.
00:19:32.431 --> 00:19:38.351
It's a market-wide issue, so it has to be fought on a market-wide basis.
00:19:38.871 --> 00:19:42.991
And indeed every association has its role to play.
00:19:42.991 --> 00:19:48.591
In France that would be of course as I mentioned it I hope you understood it
00:19:48.591 --> 00:19:52.871
by now the alpha which is really specifically devoted to fighting insurance
00:19:52.871 --> 00:19:58.531
fraud but the message has also to be relayed by the French Association of Insurance,
00:19:59.191 --> 00:20:05.131
which really gather all big corporate insurance companies so to make sure that
00:20:05.131 --> 00:20:08.871
in each of these entities there is somebody in charge.
00:20:09.583 --> 00:20:12.963
Actually responsible for handling the fight against fraud.
00:20:13.303 --> 00:20:20.783
That would also be the ACPR, the regulatory body for insurance companies in France,
00:20:20.963 --> 00:20:27.543
in particular in relation to intermediary frauds, because this should also have
00:20:27.543 --> 00:20:32.623
a regulatory sanction and withdrawal of authorization and this kind of thing.
00:20:32.743 --> 00:20:36.603
So on a national level, I think it's very important that all these organizations,
00:20:36.603 --> 00:20:43.543
They work together to warn their members on the issue, to train them,
00:20:43.743 --> 00:20:45.503
which is a huge role of alpha.
00:20:45.803 --> 00:20:53.143
I think you have two trainings a week on how to find a forged document,
00:20:53.143 --> 00:20:56.943
how to use AI to fight fraud, etc.
00:20:57.463 --> 00:21:03.043
And also to make sure there are sanctions. So that's what I would say on the national level.
00:21:03.043 --> 00:21:09.243
And of course, international cooperation is extremely important,
00:21:09.543 --> 00:21:15.703
as this actually is clear from our discussion today.
00:21:15.703 --> 00:21:20.303
Because, you know, when you see that in one country you have a specific criminal
00:21:20.303 --> 00:21:23.223
qualification for insurance fraud, like Italy,
00:21:23.443 --> 00:21:28.883
which is not the case in France, and the rule on GDPR may be more permissive,
00:21:28.883 --> 00:21:33.203
I would say, in France for authorizing insurance to use data than in Italy,
00:21:33.483 --> 00:21:37.943
and that the data are so different in the UK than they are in France.
00:21:37.943 --> 00:21:43.123
So I think there is a huge need for this international cooperation.
00:21:43.123 --> 00:21:50.083
So do we use some standards, rules, and tools to go after the phenomenon?
00:21:50.643 --> 00:21:54.723
And I do like that phrase, it takes a network to fight a network.
00:21:54.903 --> 00:21:56.483
I'm going to have to remember that one in the future.
00:21:57.663 --> 00:21:59.363
Let's turn to culture now.
00:22:00.050 --> 00:22:02.570
So how do cultural factors influence
00:22:02.570 --> 00:22:08.050
the prevalence and perception of insurance fraud in your country?
00:22:08.430 --> 00:22:10.410
Let's go to Andre on this one first.
00:22:10.970 --> 00:22:17.810
Yeah, I think I mentioned cultural aspect many times during this podcast.
00:22:18.250 --> 00:22:23.670
Someone might get offended, but the results show that fraud is encouraged,
00:22:23.930 --> 00:22:28.050
at least in Italy, by certain deeply rooted beliefs among citizens.
00:22:28.050 --> 00:22:36.330
And, for example, failing to insure a vehicle, I would say that is socially accepted,
00:22:36.990 --> 00:22:44.670
if not normal in certain areas of Italy, to give you some numbers, some data with respect.
00:22:44.950 --> 00:22:52.530
We have around 2.8 million vehicles which are circulating in Italy not insured.
00:22:53.450 --> 00:22:58.850
So in Italy, the average premium
00:22:58.850 --> 00:23:01.790
is around 500-600 euros per
00:23:01.790 --> 00:23:08.710
year So I will let the audience do the math So we can understand how of a damage
00:23:08.710 --> 00:23:15.210
this is for insurance companies And this is also with respect to this specific
00:23:15.210 --> 00:23:19.230
area But what is the basis for this cultural aspect?
00:23:19.230 --> 00:23:26.230
I think that insurance companies are usually perceived as a sort of powerful
00:23:26.230 --> 00:23:31.830
and rich entities from which, let's say, there is a right to attempt to steal.
00:23:32.250 --> 00:23:35.690
So, in fact, there is not a real social condemnation.
00:23:36.430 --> 00:23:41.110
There is no insurance literacy, for example, in Italy.
00:23:41.330 --> 00:23:46.990
So, I think until we develop an insurance knowledge across the public,
00:23:47.230 --> 00:23:52.410
the general public, the public opinion, it will be very, very difficult to lower
00:23:52.410 --> 00:23:54.790
the numbers that we are currently facing.
00:23:56.305 --> 00:24:06.145
And Romain in France? I would say that in France it's really a matter of visibility of the issue.
00:24:06.885 --> 00:24:11.325
Because, you know, we talk about tax evasion, social fraud, etc.
00:24:11.765 --> 00:24:17.725
And insurance fraud would definitely be at the bottom of this list in terms of concerns.
00:24:17.725 --> 00:24:23.945
And I think the average insured does not measure indeed the effect that insurance
00:24:23.945 --> 00:24:27.985
fraud has on its own premium and its own situation.
00:24:28.565 --> 00:24:34.905
And that actually is a good insured. Some do pay off for the bad ones.
00:24:35.605 --> 00:24:39.645
So that's one of the issues I would put forward.
00:24:39.645 --> 00:24:47.485
The other one is really the one I mentioned before in terms of the need to really
00:24:47.485 --> 00:24:54.725
put the matter forward to make sure there is an understanding by the one who
00:24:54.725 --> 00:24:57.405
are actually in power to prosecute these claims.
00:24:57.405 --> 00:25:04.085
Meaning what we would need is actually a document from the Ministry of Justice
00:25:04.085 --> 00:25:09.985
to the General Prosecutor to say one page, please have this issue in mind.
00:25:10.245 --> 00:25:14.905
It is small cases, there are small cases, but in the end it's a huge issue.
00:25:15.665 --> 00:25:18.765
So I think that's what we should be doing.
00:25:19.685 --> 00:25:24.745
And Ben, for years we've heard fraud is a victimless crime and as an industry
00:25:24.745 --> 00:25:30.585
worked very hard to really raise the perception of fraud and the fact that it isn't.
00:25:31.045 --> 00:25:34.405
So what's your views on the cultural factors here?
00:25:35.165 --> 00:25:40.465
I think there's a few cultural factors, not only jurisdiction but also lines of business.
00:25:40.465 --> 00:25:46.605
I think that if you look at specialist lines of business, they don't have the
00:25:46.605 --> 00:25:49.125
same awareness or understanding of
00:25:49.125 --> 00:25:54.965
insurance fraud that maybe more sort of property casualty motor lines do,
00:25:55.468 --> 00:25:59.848
Um, because it's been at least sort of 15, 20 years that, um,
00:26:00.588 --> 00:26:03.928
um, insurers have been working together in those lines of business and maybe
00:26:03.928 --> 00:26:05.928
less so in the specialist line.
00:26:06.168 --> 00:26:11.388
So, um, I think that means that there's a lot less detection and awareness.
00:26:11.808 --> 00:26:14.768
Um, from a jurisdiction perspective, um,
00:26:15.228 --> 00:26:18.388
when I look at what's happening in different countries across Europe,
00:26:18.648 --> 00:26:27.268
there is a marked difference in how we publicise issues about insurance fraud,
00:26:27.368 --> 00:26:32.828
whether it's cases that have been through the courts or whether it is publicity
00:26:32.828 --> 00:26:36.408
around the impacts or going to Endry's point.
00:26:37.528 --> 00:26:42.468
Unless you're actually relating insurance fraud back to the customer to say
00:26:42.468 --> 00:26:50.348
what the impact is on them, I don't think you get the real sort of deterrent effect.
00:26:51.288 --> 00:26:59.648
If you look at recent reports from RUSI where they explained that vehicle theft
00:26:59.648 --> 00:27:02.928
is more and more organized than opportunistic.
00:27:03.248 --> 00:27:10.648
And if you think that in the UK, I think last year vehicle thefts cost us about 1.5 billion.
00:27:11.268 --> 00:27:14.748
Um, that's quite a significant impact on the customer.
00:27:15.228 --> 00:27:20.048
Um, and I believe, um, I don't know if Roman can correct me,
00:27:20.148 --> 00:27:24.208
but I think France is potentially, I think they might be, um,
00:27:24.508 --> 00:27:27.508
have a greater issue with vehicle theft than we do in the UK as well.
00:27:27.688 --> 00:27:30.548
So, um, yeah. Same for Italy.
00:27:30.988 --> 00:27:37.128
Yeah. Facing unbelievable issues with vehicles sold in the Eastern Europe,
00:27:37.628 --> 00:27:40.228
also Russia, Romania, Bulgaria.
00:27:40.668 --> 00:27:46.688
So countries where also public prosecutors have little if not zero access.
00:27:48.195 --> 00:27:51.815
So this is an international issue, I would say.
00:27:52.775 --> 00:27:57.415
And they're all facilitated by supply chains across Europe.
00:27:58.615 --> 00:28:02.495
The vehicles, whether it's plant machinery from construction sites,
00:28:02.675 --> 00:28:08.535
whether it's a Toyota Hilux or something like that,
00:28:08.995 --> 00:28:14.315
they're taken from the UK's perspective, they're transported across to France
00:28:14.315 --> 00:28:22.375
or Netherlands and then straight through to Africa or to the Ukraine or Gaza or somewhere like that.
00:28:22.515 --> 00:28:30.155
So there's a lot of opportunities for people to collaborate and to identify these areas.
00:28:30.375 --> 00:28:39.675
But without that, penetrating that cultural challenge, I don't think that people would sort of...
00:28:41.155 --> 00:28:46.755
Perhaps report people who are associated to these gangs to the police or to
00:28:46.755 --> 00:28:48.275
the insurance authorities.
00:28:48.655 --> 00:28:54.975
So, yeah, it makes it a lot more difficult to break down these gangs and that sort of thing, yeah.
00:28:55.295 --> 00:29:01.195
And that leads neatly on to our final area of discussion today,
00:29:01.395 --> 00:29:07.735
which is around improvements or changes that you'd all like to see in the different
00:29:07.735 --> 00:29:11.735
jurisdictions to strengthen the fight against insurance fraud.
00:29:12.155 --> 00:29:14.655
So, Romain, should we go to you first in France?
00:29:15.115 --> 00:29:21.335
Yes, thank you, Lorraine. So, all this thing is relatively new in France.
00:29:21.715 --> 00:29:24.635
Once again, the Alpha was created 25 years ago.
00:29:25.395 --> 00:29:30.715
And, for example, in a couple of weeks from now, there will be the 14th national
00:29:30.715 --> 00:29:33.635
day for fight against insurance.
00:29:33.635 --> 00:29:40.615
So I think we are learning, we are improving what we would need is not that
00:29:40.615 --> 00:29:46.795
much of a legislative change but rather a better coordination.
00:29:47.855 --> 00:29:53.555
As we mentioned it better earlier so to make sure that all the actors and victims
00:29:53.555 --> 00:29:59.835
of the fraud act together in the same direction be the consumer association
00:29:59.835 --> 00:30:03.735
once again Association of Interest Brokers,
00:30:04.515 --> 00:30:09.255
at a national and international level and just to repeat it to make sure that
00:30:09.255 --> 00:30:15.235
the one who has the power to go after it that the general prosecutor are mindful of the problem.
00:30:16.714 --> 00:30:22.434
And Andre, from Italy. From Italy's perspective, of course, coordination and
00:30:22.434 --> 00:30:30.374
cooperation, as we discussed before, is quite essential to fight and fraud activities.
00:30:30.974 --> 00:30:37.074
But with respect to Italy, I think that two further actions will be required.
00:30:37.494 --> 00:30:44.054
One involves cultural engagement with the public opinion, while the other concerns
00:30:44.054 --> 00:30:46.154
the fight against organized crimes.
00:30:46.154 --> 00:30:50.714
And also this is something that
00:30:50.714 --> 00:30:55.134
quite concerns me with respect to the first one I think that it is essential
00:30:55.134 --> 00:31:01.214
in Italy to promote a sort of insurance literacy across all the country and
00:31:01.214 --> 00:31:06.314
let me say not just the public the general public but also brokers,
00:31:06.734 --> 00:31:13.354
intermediaries and also insurance companies that should start to treat insurance
00:31:13.354 --> 00:31:18.094
fraud as it really is, as it is in fact.
00:31:18.354 --> 00:31:25.494
So it's one of the most relevant issues that we are facing on a daily basis.
00:31:25.734 --> 00:31:29.794
And the other one, as I said, concerns the fight against organized crime.
00:31:29.974 --> 00:31:38.834
Because as Ben was saying before, this is not fraud. but it's now an issue that
00:31:38.834 --> 00:31:44.254
involves international gang-organized crimes.
00:31:45.434 --> 00:31:48.994
So we need to step up on this.
00:31:49.554 --> 00:31:55.214
The level of attention needs to be much, much higher.
00:31:55.494 --> 00:31:59.574
We need to invest in artificial intelligence. We need to invest in cooperation.
00:31:59.594 --> 00:32:06.234
We need to invest in gathering the data, but we must do it as a unit.
00:32:06.394 --> 00:32:08.094
Not country per country.
00:32:09.558 --> 00:32:12.738
Thank you. And over to you, Ben, final word.
00:32:13.098 --> 00:32:18.418
I feel like I'm going to repeat the other two parrot fashion. I don't disagree at all.
00:32:19.258 --> 00:32:25.198
Collaboration is the fundamental aspect, whether it's in relation to gathering
00:32:25.198 --> 00:32:30.238
data, trend analysis, collaboration on criminal networks.
00:32:32.058 --> 00:32:39.238
I think that's the primary key to better detection and improvement in what's happening.
00:32:39.878 --> 00:32:45.318
And then the publicity around what fraud looks like and the impact on society
00:32:45.318 --> 00:32:48.618
in each country. I think it's so important.
00:32:49.058 --> 00:32:52.978
And I think I said earlier, it's kind of a catch-22.
00:32:53.298 --> 00:32:59.238
You need to get the data to ensure the impact, but you can't actually get the
00:32:59.238 --> 00:33:04.938
data because there isn't the priority behind that strategy as such.
00:33:05.138 --> 00:33:11.258
So, yeah, it's a combination of things. It's complex as most things are,
00:33:11.398 --> 00:33:18.238
but I think collaboration on all of the above is extremely important. Absolutely.
00:33:19.258 --> 00:33:25.818
Remains to be said, thank you all very much for listening. We hope you found this very insightful.
00:33:26.398 --> 00:33:32.638
Thank you specifically to our guests, to Ben, to Roman and to Endre for joining
00:33:32.638 --> 00:33:37.018
us and giving us such an insight into the different jurisdictions.
00:33:37.018 --> 00:33:43.238
We do hope you will join us again for the next episode in the Risk Matters series.
00:33:44.978 --> 00:33:48.738
Thank you for listening to Risk Matters, the DWF insurance podcast.
00:33:49.198 --> 00:33:52.378
We hope you join us again soon for future podcasts in our series.
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