On 22 September 2016, the Association of British Insurers (ABI) issued a checklist on effective counter fraud measures.
The aim of this checklist is to assist insurers (especially smaller insurers) with a limited counter fraud function, and also their corporate partners, so they could ultimately establish strong fraud defences. Moreover, the checklist enables firms to contribute to the UK insurance sector's counter fraud strategy, and therefore helps to ensure that the UK remains an attractive business environment.
Even though it is understood by the ABI that insurers might already have their own commercial strategy and risk appetite and accordingly their own fraud controls established, the ABI highlighted the importance of having a unified front. It is considered that, unless all insurers and their partners work towards the same direction, fraud will shift around the market and remain prevalent.
According to the ABI checklist, the insurance industry must meet its regulatory expectations. With financial crime now being one of the Financial Conduct Authority's (FCA) top seven risks, the FCA has continued supervisory visits to small firms that may be exposed to a high risk of financial crime. Having documentary evidence that firms have concluded risk assessments and have taken action where necessary will help both commercial decision-making and firms' discussions with the FCA about counter fraud measures.
The checklist includes the following sections:
Counter fraud strategy: defining scope, establishing risk appetite and setting targets
Policies and procedures: establishing internal policies and procedures (non-negotiable and mandatory) and cascading these throughout the organisation
Staff training: training all staff to support the counter fraud strategy
Board level engagement: in view of the regulatory expectations, establishing good counter fraud governance is vital, with the fraud strategy being set from the top down
Investigative capability: in-house capability and outsourced solutions
Enforcement: considering referring cases to enforcement and bringing legal actions
Engagement with industry bodies: supporting core industry counter fraud initiatives
Support industry initiatives: supporting industry work to identify scale of fraud and patterns and trends
Comply with regulatory and industry guidance: ensuring all staff are familiar with and comply with both regulatory rules and guidance
Customers/ policyholders: taking measures to protect honest customers from insurance fraud as well as actively educating customers/policyholders