Criminal Justice and Courts Act 2015 Section 57 of the Act contains the much-awaited provision which places an obligation on judges to strike out a personal injury claim where there is a finding of fundamental dishonesty. The Act extends the concept of fundamental dishonesty beyond the exception to qualified one way costs shifting (QOCS) introduced as part of the civil justice reforms in 2013. The section targets those claims for personal injury where the evidence suggests that the claimant has been fundamentally dishonest in pursuing that claim. Once a claim has been struck out, the claimant will be ordered to pay the defendant’s costs, less the value of any genuine element of the claim. The net effect of this costs provision mirrors the fundamental dishonesty exceptions to QOCS. It is not yet clear how the courts will define ‘substantial injustice’ or ‘fundamentally dishonest’ in the context of the Act, and the wording is ambiguous as to which special damages relating to the personal injury element of the claim will fall to be struck out under this section. It may include claims for care, rehabilitation and future loss but is unlikely to include claims for vehicle damage. The section does extend to any related claim for damages made by another person in the same incident which is fundamentally dishonest. A typical example would be a personal injury claim submitted by a bogus passenger. In those circumstances, the strike out will extend to both the bogus passenger and any genuine personal injury claimant supporting it. Section 58 prohibits certain regulated persons from offering inducements to make personal injury claims. The regulated persons that fall within the ban are defined by reference to their regulating body and while it would seem that the Act intends to include solicitors, the regulating body is referred to as The Law Society when it should be the Solicitors Regulation Authority. Whether the courts will construe this as extending to solicitors therefore remains to be seen. spring 2015 hilldickinson.com/fraud Civil claims - expert opinion Page 4 Q&A - Glen Marr, director of fraud, 1st Central Page 6 Case update: deceit and fundamental dishonesty Page 10 fraud watch >>> continues on page 2 The Criminal Justice and Courts Act 2015 has now received Royal Assent, although the date of commencement for sections 57 and 58 has yet to be set. 2 Welcome Welcome to the spring 2015 edition of the Hill Dickinson counter fraud group’s quarterly newsletter, fraud watch. We hope that you find this both an enjoyable and informative read. Our cover story highlights the Criminal Justice and Courts Act 2015 and considers how the court’s obligation to strike out personal injury claims for fundamental dishonesty will work in practice. In addition, one of the many changes to civil procedure arising from the civil justice reforms has been to the use of experts in civil claims - with further changes specific to medical experts underway, Mark Stanger takes a look at what has changed… and why. I talk to Glen Marr, director of fraud at 1st Central, in our regular Q&A feature and we find good news for insurers in the fight against first party fraud, as Stratos Gatzouris considers the decision in Versloot Dredging BV -v- HDI Gerling Industrie Versicherung AG. We do hope that you enjoy this latest edition of our newsletter. If you would like any more information about the areas covered, would like to discuss any of the issues featured or make suggestions for what you would like to see in future editions, please do not hesitate to get in touch with any one of the team. Best wishes, Peter Oakes Partner, Head of Fraud firstname.lastname@example.org >>> continued from page 1 Stratos Gatzouris email@example.com Fundamental dishonesty without fraud Oana -v- O’Duinn and Aviva In a recent motor fraud case, a judge in Northampton County Court made a finding of fundamental dishonesty even though the defendant had not pleaded fraud. The claim, investigated by Aviva, followed an alleged accident which was said to have taken place in West London. Enquiries revealed inconsistent documentary evidence, untraceable passengers and intelligence confirming similar incidents linked to the same address. The evidence persuaded the judge to find that the claim was ‘fundamentally dishonest’ even though the defendant had not specifically pleaded fraud. With a finding of fundamental dishonesty, the defendant can benefit from the exception to QOCS and, in due course, the claim may be struck out under the Criminal Justice and Courts Act. The fact that the court was willing to make a finding of fundamental dishonesty without an allegation of fraud indicates that the definition of ‘fundamental dishonesty’ is wider than ‘fraud’ and is likely to extend to cover more cases. Stratos Gatzouris firstname.lastname@example.org Whiplash reform - the story continues 6 April 2015: medical experts must register with MedCo by 6 April 2015 Claimants must use the MedCo portal to commission a first fixed fee report in all soft tissue injury claims started by way of claim notification form sent on or after 6 April 2015. The claimant will be able to search the MedCo portal for a suitable expert. The results produced will exclude any experts with direct financial links. 1 June 2015: claimant solicitors must undertake ‘previous claims’ checks on potential claimants and insert a unique reference number generated by that search on all claim notification forms sent on or after 1 June 2015. 1 January 2016: all medical experts must be accredited by MedCo Registration Solutions by 1 January 2016, failing which they will be removed Criminal Justice from the system. and Courts Act: while the Act has received Royal Assent, a commencement date has yet to be set. Watch this space! fraud watch spring 2015 3 Currently, the Consumer Insurance (Disclosure and Representations) Act 2012 governs the consumer-insurance contract between an individual and an insurer. The new Act is concerned mainly with the non-consumerinsurance contract between businesses and traders, and the insurer. The Act focuses on a number of key areas: disclosure and representations, warranties and fraudulent claims. Importantly, the Act abolishes the right to avoid a contract for non-compliance with the duty of utmost good faith. It should also be stated at the outset that the Act allows the parties (in nonconsumer contracts only) to agree their own contract rules and to contract out of the statutory provisions, with some exceptions, provided that if the contract puts the insured in a worse position than that which is contained in the statutory provisions, then the insured must be informed of this in clear and unambiguous terms. Disclosure The disclosure provisions introduce the ‘duty of fair presentation’ (of the risk), as opposed to the current law which imposes a considerable burden on the proposer to disclose all information that would be material to the insurer - even if that representation had been made innocently. The fair presentation of risk means that the proposer has an obligation to disclose (in a manner that makes it reasonably clear and accessible to the prudent insurer) everything it knows, or ought to know, of every material circumstance. Failing that, such disclosure should be sufficient to put a prudent insurer on notice that it needs to make further enquiries for the purpose of ascertaining those material circumstances. The remedies for breach of the disclosure obligations have been radically reformed: if the breach is deliberate, or reckless, the insurer still has the right to avoid the contract if it would not have entered into the contract but for the misrepresentation or would have entered into the contract on different terms. However, the concept of ‘qualifying breach’ of fair presentation is introduced and this depends on whether or not the breach was deliberate or reckless. If it was deliberate or reckless, the insurer may avoid the contract, refuse all claims and retain any premiums paid. If not, the policy can still be avoided (if the circumstances are material), but the premiums must be returned. However, if the insurer would have entered into the contract, but on different terms, provision is made for the contract to remain valid but for an adjustment (in premiums) to be reflected in any claim that is paid out. Warranties As the law stands, an insurer is not liable (from the point of breach) for payment on any claim if a warranty term is breached. This remedy will now be abolished to the extent that an insurer will remain liable if the breach is remedied before the loss. The controversial provision requiring that insurers should not be discharged from liability where the warranty breach is not related to the loss is expanded upon (and arguably watered down), in that the risk of loss will be relevant if it relates to a loss of a particular kind, location and time. Crucially, however, insurers will not be able to rely on such a breach if the insured’s non-compliance would not have increased the risk. Fraudulent claims The sections in the Act relating to fraudulent claims have passed through parliament with little controversy. The starting point remains that an insurer will not be liable for any fraudulent claim and can recover any payments made to the insured in respect of the fraudulent claim. The departure point is the fact that the insurer will be entitled (on notice) to treat the contract as having been terminated from the date of the fraudulent act and need not return any premiums paid under the contract. However, any valid claims that precede the date of the fraudulent claim will be unaffected, which clarifies some of the confusion that may have arisen via case law. For the fraud practitioner, the fraud provisions are welcome and clear. In the area of first party fraud, it is still the case that a fraudulent claim or fraudulent device will result in the entire claim being repudiated/dismissed. That part of the law remains intact. However, insurers wishing to raise a defence pleading misrepresentation and/or breach of warranty will now have to ensure that the insurance contract terms comply with the disclosure and warranty obligations imposed by the Act. Stratos Gatzouris email@example.com Insurance Act 2015: an update The Insurance Act 2015 has now received Royal Assent and will come into force in August 2016. The Act is the result of a ten year project by the Law Commissions of England and Scotland to reform and update insurance law. Stratos Gatzouris takes a closer look. One of the many changes to civil procedure arising from the civil justice reforms has been to the use of experts in civil claims. With further changes specific to medical experts underway, Mark Stanger takes a look at what has changed… and why. The civil justice reforms were premised on the need to regulate and reduce the cost of civil proceedings while making litigation more efficient. In terms of expert evidence, Sir Rupert Jackson concluded that costs needed to be reduced through both streamlining procedure and in the way that such evidence is presented in court. The changes also introduced an alternative way for experts to present oral evidence at trial. Instead of providing their evidence sequentially, expert evidence may be dealt with concurrently. This process is also known as ‘hot-tubbing’ - as all the parties’ experts are questioned together by the judge based on the disagreements in their joint statement. The intended effect of these changes is to control the cost and proportionality of medical evidence in low value whiplash claims, while improving the quality of the evidence by ensuring the experts are independent of those instructing them. The consequences From a practical perspective, the changes have altered the way in which parties must go about instructing an expert. Here are a few tips… From the outset, parties must ensure that the nominated expert provides an accurate costs estimate up front, so that the court and opposing parties are on notice. Requiring an accurate costs estimate means that costs are kept under control and proportionate to the issues. Any objections to the level of the opponents costs estimate should be made in a timely fashion, as to leave it to the permission stage will place the opposing party at a disadvantage. With greater scrutiny of the issues that the evidence is to address it is essential that instructions to an expert are clear and concise. The changes to the rules mean that experts being invited to speculate over a range of issues while recommending the instruction of even more experts will be a thing of the past. Reports that contain such speculation are likely to be curtailed or even refused entirely at the permission stage. Experts must be instructed to clearly identify the issues dealt with and justify their relevance to the issues in dispute between the parties. In cases involving suspicions of fraud, the approach of obtaining engineering evidence impacting on damage consistency without any reference to the opposing party and then seeking permission for the same if proceedings are issued has become riskier. A court presented with engineering evidence that goes to damage consistency and occupant displacement would already have expected such matters to have been raised under Casey -v- Cartwright guidance. Conclusion The changes to the instruction of experts have had a significant effect on the approach to expert evidence. By insisting upon a costs estimate at the outset along with justification as to how the evidence will assist the court, they encourage parties to carry out a costs benefit analysis early on in proceedings. The rules governing expert evidence are themselves much stricter than before, and together with the courts’ more stringent approach to compliance (Denton), it is essential that parties make sure that they, and their experts, comply with the rules, court deadlines and overriding objective. Mark Stanger In-house counsel firstname.lastname@example.org 4 The changes In April 2013, the following rules governing expert evidence were introduced: 1. Applications for permission to rely on expert evidence need to be accompanied by a costs estimate. 2. Applications for permission to rely on expert evidence should not only identify the field in which the expert evidence is required but also the issues which the expert evidence will address. 3. The court order granting permission should specify the issues that the expert evidence is required to address. expert opinion Civil claims - expert opinion Civil claims - 5 fraud watch spring 2015 In October 2014, further rules governing medical evidence in soft tissue injury claims were introduced: 1. The cost of obtaining medical evidence is fixed at £180 for a first report, with additional set fees for specialist reports, obtaining medical records and replies to questions. 2. Claimants are limited to a single report and will need to justify any request for permission to rely on further evidence, or to step outside of the fixed fee scheme. 3. In cases where liability or causation is in dispute, defendants are able to provide their own account to the claimants’ expert via their portal response. 4. Experts are not allowed to offer or provide treatment to a claimant, and if they do so, will forfeit their report fee. 5. A settlement offer made under CPR36 will have no costs consequences until the medical report is served. 6. From April 2015, experts or medical reporting organisations will be allocated randomly through a new IT portal called MedCo. A random list of seven medical experts (or one high volume MRO and six smaller ones) will be produced and the claimant will be able to choose the one that they wish to instruct. In order to use the portal, experts will need to achieve accreditation by 1 January 2016. 6 Q What is your role? A I am director of fraud at 1st Central. I am responsible for our holistic counter-fraud defences, which operate at point of quote, sale and during the policy life cycle. I am responsible for our anti-money laundering, terrorist financing and politically exposed persons systems and controls for our motor insurance product and premium finance offering. On top of that, I am also the owner of our anti-bribery and whistleblowing policies. I am supported by a multi-disciplined counter fraud services team handling all third party personal injury claims received through the portal. Suffice to say it’s a busy role! Q How did you get to where you are? A I started at the grass roots in this industry in Australia, after a career as a police officer. Moving to the UK, I have worked with a number of insurers and, immediately prior to starting with 1st Central, I was director of the Insurance Fraud Bureau. I have tackled fraud in Australia, the UK and across Europe, during which time I have been continually involved in industry counter-fraud strategy via the Association of British Insurers. My career has involved a combination of hard work, long days, working for (and with) many tremendous people, a desire to consistently achieve great results, ambition, some risk taking, a little luck at times, plenty of humour, beers and a curry on Friday evenings to unwind - and all supported by my wife. Q What do you most enjoy about your job? A Firstly, I work with and for great people. Secondly, it is never dull. I hold a diverse range of responsibilities and operate in an environment whereby change is very fluid and often at pace. While 1st Central is one of the smaller market players in terms of motor insurance, I firmly believe we punch well above our weight when it comes to our response to fraud risks and we are continually looking to up the ante in this regard. We don’t do ‘standing still’. Q What is the most satisfying claim that you have dealt with? A I can think of countless claims over the years which have yielded satisfying results across all manner of insurance products. However, thinking back to my days as a fraud investigator, one particularly prominent claim springs to mind. I was investigating a commercial property fire claim, of sizeable financial value, following concerns raised by the claims handler. Through an interview with the policyholder and other investigations, I uncovered some material evidence and arranged to meet the claims handler at one of the insurer’s offices in a different part of the country, to discuss my findings. The policy was successfully voided and the entire claim repudiated. That proved to be a fortuitous meeting with the claims handler - we have now been married for 17 years! Q&A Peter Oakes talks to Glen Marr, director of fraud at 1st Central, about fundamental dishonesty, Australia and love at first sight! From Peter: I would like to thank Glen for taking the time to share his insight with us. Q If you could change one thing about the claims process what would it be? A I have a wish list, but it’s not short! Singling out one item from the wish list would be more accessible claimant interview facilities, as this would have a positive bearing on fraud prevention and help shortcut the process of identifying and defeating spurious claims. Q How has the use of technology changed the way you deal with claims? A Technology, plus use of data, has helped modernise the claims process. In the counter-fraud space this particular combination has proven very powerful. Automating the targeting of suspect claims has to feature as a core component of any fraud strategy. Coupled with what is now achievable at point of quote and sale investment in technology has been a game changer for the industry. Data analytics in the counterfraud space was at one time aspirational, whereas now it’s being viewed as a core component of fraud management. Q What do you see as the biggest challenge for the industry over the next 12 months? A There are many challenges facing the industry, especially in the motor space. One of them is a lack of clarity about what will happen with whiplash claims and projecting the volume of these. Another challenge is recruiting readymade and experienced technical claims and counterfraud people. The demand for this type of resource appears to exceed available supply in many areas of the UK and the industry needs to protect against the availability of this resource further shrinking. Good claims handling and fraud management is not a process - it requires skilled and well trained people. Q How do you think the Government’s programme of whiplash reform will affect claims? A Successfully reducing whiplash claims simply won’t be achieved unless wide-ranging changes are made. The journey to tackle the issue has begun, but the Government needs to do more, without losing sight of the fact that there are genuine claims in the mix. Q As you may know, fundamental dishonesty is a hot topic right now. What are your thoughts on section 57 of the Criminal Justice and Courts Act? A This looks to be another tool in a defendant’s counter-fraud armoury, but it is set against an industry backdrop whereby speed of decision making for whiplash claims has become a key measure and there are challenges in handling low velocity impact claims. For insurers who take tackling third party personal injury motor claims fraud seriously, this will be well received and no doubt utilised. It is something to welcome. Q Do you think that sharing data with claimant solicitors will affect fraudulent claims? A I originally suggested that claimant law firms should be provided with access to personal injury claims data about four years ago, so I am of the view that this has to be a positive step. Frustratingly, it has taken some time to convert the concept into reality, but all the claimant law firms I have spoken to on the subject have welcomed and been fully supportive of the facility being made available. In short, it makes sense and hopefully once successfully deployed, further dialogue can take place to explore other opportunities for the use of pooled data for fraud prevention purposes. Q What else do you think can be done to tackle organised fraud? A Organised fraudsters are not easily dissuaded from their criminal activities. The response to organised insurance crime needs to include enforcement action and asset seizures. However, the industry first needs to identify organised fraud and there is clearly scope for it to step up a gear in terms of its detection capabilities. At the heart of such a strategy is the pooling and sharing of industry fraud intelligence, which is currently fragmented. If we don’t leverage industry fraud intelligence, then it’s a missed opportunity and the winners will continue to be organised criminals. Further, while the industry can provide examples of detected organised crime, it’s highly unlikely to represent more than the tip of the iceberg. fraud watch spring 2015 7 Peter Oakes email@example.com 8 Background – the forfeiture rule It is established law that if an insured makes a fraudulently inflated claim under its policy, it will forfeit any lesser claim which it could have properly made. This rule exists to deter insureds from deceiving their insurers who will inevitably know less about the circumstances surrounding the claim. The question in this case was this: does the forfeiture rule apply to fraudulent means or devices? In other words, if an insured uses a fraudulent device to support a claim, should they forfeit the whole claim? In Versloot Dredging BV -v- HDI Gerling Industrie Versicherung AG, the Court of Appeal clarified the position with a unanimous ruling. The facts The claimant’s vessel, the “DC MERWESTONE”, suffered a flood causing irreparable damage to the engine when in waters close to Lithuania. Water was left in the emergency pump and the sea valve was not closed. The water froze, expanded and cracked the pump resulting in a direct opening to sea water. As the vessel reached warmer waters, the ice melted and sea water flooded the engine. In a recent case, the Court of Appeal authoritatively confirmed that an insured who seeks to employ a fraudulent device against its own insurers will forfeit the whole of its claim. Stratos Gatzouris considers the decision in Versloot Dredging BV -v- HDI Gerling Industrie Versicherung AG and what it means for insurers in the fight against first party fraud. Good news for insurers in the fight against first party fraud A fraudulent device was defined in Agapitos -v- Agnew (“THE AEGEON”) as being used if ‘the insured believes that he has suffered the loss claimed but seeks to improve or embellish the facts surrounding the claim by some lie’. It can be a false signature, an amended invoice or false information provided in support of an otherwise genuine claim. In “THE AEGEON”, the court held that the rule on fraudulent claims extended to fraudulent devices. As this was obiter, it was persuasive but not binding and courts have adopted inconsistent approaches. 9 During the investigation, the insurers sought an explanation for the flood and the apparent failure to manage it. In a letter to the insurers, the owners made a representation that appeared to lay the blame for failing to manage the flood on the crew, by stating that the bilge alarm had gone off on the day of the incident, but that the crew had chosen not to investigate, attributing the alarm to the rolling of the vessel. It transpired that this representation had been made without investigation and the owner consciously chose not to investigate because he did not want to know that it was false. The owner later claimed that the representation was a hypothesis and was not intended to be construed as fact. This was not accepted. At first instance, the court held that it was a reckless untruth made with the intention of improving the prospect of payment of the claim that amounted to a fraudulent device and, applying the decision in “THE AEGEON” ruled that the claim was forfeit. The appeal The owners appealed on various grounds of fact and law. The appeal in law was twofold. Firstly, the owners submitted that the rules about fraudulent claims should not apply to fraudulent means or devices. Secondly, they submitted that if the rule were to apply to fraudulent devices, then it would be in breach of the right to protection of property as set out in Article 1 of the First Protocol to the European Convention on Human Rights. Extension of the forfeiture rule The Court of Appeal dismissed the owner’s argument that the rules about fraudulent claims should not apply to fraudulent devices. In the leading judgment, Clarke LJ gave six reasons why the rule should extend to them: • While the decision in “THE AEGEON” is not binding, it is authoritative. • A fraudulent device is a sub-species of a fraudulent claim and applying the rule to fraudulent devices adopts a coherent approach, based upon the special relationship between insurer and insured: ‘The fraudulent insured must not be allowed to think if the fraud is successful, then I will gain; if it is unsuccessful, then I will lose nothing.’ • It is a matter of public policy. While arguably harsh, the consequence of forfeiture will only apply to those who are dishonest. • The court also relied on the numerous consultation papers that have been published as part of the recent spate of insurance law reform; which seemingly take for granted that the rule of forfeiture for fraudulent claims already applies equally to fraudulent devices. • There is antecedent authority supporting the application of the rule to fraudulent devices. • “THE AEGEON” has been cited without disapproval in a number of subsequent cases. The court saw no need to consider the issue of proportionality on the basis that it is the drastic effect of the forfeiture rule that has a deterrent effect. The decision Dismissing each of the factual and legal arguments on appeal, the court found that the extension of the forfeiture rule to fraudulent devices was a proportionate means of securing the aim of deterring fraud in relation to insurance claims. Clarke LJ specifically incorporated the persuasive decision set out in “THE AEGEON” as binding law in this case. What does this mean for insureds? Following on from this decision, an insured will now forfeit the entirety of its claim if it employs a fraudulent device that satisfies the following test: • the device must be directly relevant to the claim; • the device must have been intended by the assured to promote his prospect of success; and • the device must not be irrelevant but such that, if believed, it would have tended to yield an improvement in the insured’s prospects of success prior to any final determination of the parties rights. What does this mean for insurers? This is a welcome decision for insurers. If an insured employs a fraudulent device in a claim it will forfeit the whole of the claim. This sends out a clear message that fraud - under any guise and to any extent - will not be tolerated. An appeal has been lodged with the Supreme Court and so it remains to be seen whether the decision will stand. Stratos Gatzouris firstname.lastname@example.org Richard Allingham email@example.com ‘The rule is only applicable in the case of fraud, from which no insured should have any difficulty in abstaining. The careless or forgetful insured is not affected, nor is the insured who tells some irrelevant lie or whose lie is not told in order to induce payment.’ - Clarke LJ fraud watch spring 2015 10 Frank Houlgate Investment Company Limited -v- Biggart Baillie LLP  This is a Scottish case where the pursuer (claimant), an investment company, was defrauded by the defendant law firm’s client who had advised his solicitor of the fraud, but asked that this should not be communicated to the other side. The solicitor felt that he was bound by his duty of confidentiality not to disclose this information. The court held that a solicitor has an obligation to act honestly and also that there is an implied representation to the other party that he is doing so. Comment While this is a Scottish case which may not be followed in the English courts, it could be appealed. The judge used the term ‘fundamental dishonesty’, which is interesting given that this phrase is under scrutiny following its introduction to the Civil Procedure Rules and the Criminal Justice and Courts Act. More importantly, if it were to be accepted here, defendants would be able to seek damages from the claimant’s solicitors directly if they were able to prove that the solicitors were aware of the fraud and did not act on it. JST BTA Bank -v- Ablyazov & Ors  HC This is an English High Court decision in which the defendant was alleged to have used a strategy of deception in order to conceal assets from the claimant which had obtained judgment against him. The claimant sought disclosure of documents from three firms of solicitors whom the defendant had instructed which it was alleged demonstrated the defendant’s deception. Whilst such documentation would ordinarily attract legal and/or litigation privilege, the court held that a client’s use of his solicitor as a means to fraud was such that an ordinary solicitor/ client relationship did not exist and therefore the documents in question did not attract privilege. Comment As with the Scottish case, there is a mountain to climb in proving the allegation that the solicitor has been used as a vehicle for committing fraud. However, fraud practitioners should be aware of the potential ramifications of this case which suggests that it may be possible that where the claimant has deceived his/her own solicitors, privilege may be dispensed with if it is found that there has been a fraudulent claim by their client. So, for example, might this apply in cases where surveillance evidence has been disclosed which shows, and experts then agree, that there has been a deception and the claimant’s solicitors continue to act on the basis that there has not been such a deception? Might this strand of thought then be extended to taking action against the solicitors not just for costs but also for damages (as was the case in Frank Houlgate -vBiggart Baillie)? Food for thought… Stratos Gatzouris firstname.lastname@example.org Stratos Gatzouris considers some recent cases involving deceit and fundamental dishonesty. Beware what you tell your solicitor! Case update 11 Diamond geezer... The Insurance Fraud Enforcement Department (IFED) has arrested nine people as part of an investigation into £450,000 worth of household insurance claims. 60 City of London police officers took part in the arrests which involved ten local police force areas. Amongst the claims being investigated is a claim for diamond jewellery, cash and electronics worth £60,000 supposedly taken during a burglary and £1750 for a settee said to have been covered in paint when a man fell while decorating. MyLicence... The Motor Insurers Bureau and the Driver and Vehicle Licensing Agency have teamed up to create a new insurance counter-fraud system called MyLicence. The system is based on a data sharing programme which enables insurers and brokers to access DVLA data on motoring convictions and penalty points when providing motor insurance quotes. A blinding mistake... A former soldier and his wife have been jailed for 12 months for fraudulently claiming that their eight year old son had been blinded in a bike accident. By forging a letter from a consultant they received £70,000 compensation. The pair were caught out when they attempted to claim a further £35,000 for hearing loss as a result of a car backfiring. Serial offender... A fraudster has been convicted of a further scam, only weeks after being released from prison. Anthony Gribbin, a businessman from Bradford, was jailed for three years in 2012 for ‘deviously and deliberately’ selling on more than £200,000 of stolen farming and construction machinery. Only weeks after his release, he submitted a fraudulent insurance claim through which he tried to make a gain of £6500 on a forklift and £2000 on a trailer. Pleading guilty, he received an eight month suspended prison sentence and was ordered to carry out 200 hours unpaid work. Daily rate... According to new figures from the European Insurance and Reinsurance Federation, insurers across Europe paid out an average of £2 billion (€2.6 billion) in claims and benefits per day in 2013. Of that amount, €103 billion related to motor insurance claims. Milestone moments... In December 2014, the number of suspected fraudsters dealt with by the Insurance Fraud Enforcement Department topped 1000. Between January 2012 and December 2014, IFED has made 62 arrests and undertaken a further 386 voluntary interviews. They have secured 185 police cautions, 109 convictions and seized £251,356 from fraudsters and returned it to victims Every little helps... A fraudster who staged accidents with Tesco delivery vans has been sentenced to three years in prison as part of Operation Catcher. Working in partnership with Tesco, the Insurance Fraud Bureau and Hill Dickinson identified that Bashir Zairi had committed a number of deliberately staged, induced or contrived collisions with a financial value of £313,000 of which £279,267 was pocketed by Zairi for making false claims for personal injury, vehicle hire, vehicle storage, recovery and damages. The hands-on approach... Almost 20% of insurers still rely on manual detection of fraud without the assistance of technology. 72 insurers from the UK, Belgium, France, Netherlands, Portugal and Spain took part in a survey carried out by software firm SAS. A third of respondents did not have any full time fraud specialists and 40% said that they had no detection systems in place for organised fraud. Well I never... According to a survey carried out by Kwik Fit Insurance Services, 8% of drivers have admitted to committing insurance fraud and 6% would consider telling white lies to cut their renewal premium. Young adults are 19 times more likely to try to defraud their insurer than those aged 55 and over and almost one in five young adults admitted to falsifying information on home or car insurance in order to get a cheaper quote. Less pain in the neck... The Institute and Faculty of Actuaries (IFoA) has indicated that the number of whiplash claims has fallen by 12% since LASPO came into force in 2013 - with a 19% drop in the cost of such claims. This has led to a 35% drop in the number of claims management companies (CMCs) and a reduction in legal fees of 65%. The IFoA however warn that the effect of increasing numbers of Alternative Business Structures (ABSs) is yet to be felt and that ABS’s may move into the space left by CMCs. Fraud news fraud watch spring 2015 fraud watch spring 2015 About Hill Dickinson The Hill Dickinson Group offers a comprehensive range of legal services from offices in Liverpool, Manchester, London, Sheffield, Piraeus, Singapore Monaco and Hong Kong. Collectively the firms have more than 1250 people including 190 partners and legal directors. The information and any commentary contained in this newsletter are for general purposes only and do not constitute legal or any other type of professional advice. We do not accept and, to the extent permitted by law, exclude liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. Whilst every effort has been made when producing this newsletter, no liability is accepted for any error or omission. If you have a particular query or issue, we would strongly advise you to contact a member of the counter fraud group, who will be happy to provide specific advice, rather than relying on the information or comments in this newsletter. Liverpool Manchester London Sheffield Piraeus Singapore Monaco Hong Kong hilldickinson.com/fraud ® Working together Hill Dickinson is the only law firm able to perform searches of Cifas’ National Fraud Database. Our membership enables us to not only search the database on behalf of our clients, but to also share data from our own cases to assist other Cifas members in the prevention and detection of fraud. Delivering results Membership of Cifas strengthens our existing intelligence capability to deliver results for our clients. This was especially true in a matter that Mick Lawless handled on behalf of Cooperative Insurance recently… A road traffic accident was alleged to have occurred in July 2013. Results from our Netfoil database indicated that one of the claimants had been involved in another claim that had been successfully defended by Hill Dickinson due to fraud concerns. We suspected that the accident had been staged and were looking for a demonstrative link between the parties or otherwise strong evidence of fraud. Initial enquiries quickly identified that several claimants had criminal convictions for drugs offences and in one case, escaping custody. We also investigated a Cifas entry which revealed that there was a recorded instance of identity fraud at the address of another claimant and we uncovered evidence linking the claimant’s email address and phone number to a number of credit applications made in the name of a previous occupant of the premises. This intelligence enabled us to contact the identity fraud victim to assist us in discrediting the claimant. On disclosure of this evidence, the claimant’s solicitor came off court record and the claim was struck out. The claimant was ordered to pay our clients costs and we obtained judgement against the claimant in the tort of deceit. As a result, the claimant was ordered to pay exemplary damages of £7500. Mick Lawless email@example.com unite in the fight against fraud and Events for 2015 Here are some of the events that we will be hosting through the next few months. We hope to see you there! Date Event Location 19 May 2015 BVRLA regional conference Hill Dickinson London 11 June 2015 Hill Dickinson fleet and logistics seminar Hill Dickinson London TBC Travel fraud seminar Hill Dickinson London Please get in touch with us if you would like any further information. Hill Dickinson has a team of over 70 experienced counter fraud lawyers and analysts. Supported by Netfoil, Hill Dickinson’s market-leading counter fraud database, they are able to provide advice to insurers and corporate clients to assist in defeating fraudulent claims, to implement fraud prevention and detection initiatives and, where appropriate to recover assets and payments made to fraudsters. If you would like to know more about us, or any other services we provide please visit our website or contact: Peter Oakes Partner, Head of Fraud firstname.lastname@example.org Lisa Kelly Partner, Head of Fraud Operations email@example.com Stratos Gatzouris Partner firstname.lastname@example.org What is Cifas? Cifas is the UK’s fraud prevention service. Its aim is to enable organisations in every sector to prevent fraud and protect the public by sharing data. Cifas’ National Fraud Database contains data on hundreds of thousands of confirmed cases of fraud. Cifas currently has over 260 members, including banks, insurers, brokers, vetting agencies and telecommunications companies.