Despite safer roads, according to the ABI, in 2012/13 there were just under 477,000 claims for whiplash, equating to nearly one claim every minute. The UK has been hailed as the Whiplash capital of Europe: 78% of low value motor personal injury claims are for whiplash, compared to an average of 48% throughout the rest of Europe. Whiplash claims cost the insurance industry circa £2billion per annum and add on average £90 to consumers’ insurance premiums.
The IFB estimated that one in seven personal injury [PI] claims are linked to suspected crash for cash claims. There are cases of organised criminal gangs staging ‘slam ons’ with buses, facilitating fraudulent PI claims by large groups of passengers. The monies to be made are significant and the industry cannot underestimate the sophistication and determination of organized criminality in relation to lucrative PI claims.
It is good news that motor premiums fell, according to the benchmark British Insurance Premium Index, over the past two years in the expectation that new Government legislation would curb the number of injury claims. We have the second round of whiplash related reforms yet to be introduced, including the launch of the central IT Hub MedCo anticipated this April, the medical expert accreditation scheme and the proposed data sharing between claimant law firms and the insurance industry. The impact of these on the volume of whiplash claims is yet to be seen. There are those in the industry that say insurers cannot afford to wait any longer and we can expect to see motor insurance premiums rising, at least in the short term.
There can be no doubt that the Government and the insurance industry is committed to reducing spurious personal injury and whiplash claims and their financial impact on premiums. Whilst change driven by legislation is underway, by its very nature it takes time. What more might insurers be able to do proactively at an operational level to assist their cause and defend their businesses against fraudulent personal injury and whiplash claims?
Although there are a growing range of data sources available from cross industry initiatives and third party providers, some insurers may still be predominantly relying on their own internal information to mitigate risk. However, as an industry, it is recognised that the most robust approach to preventing and detecting fraud is delivered by mining multiple relevant and trustworthy data sources.
There are key opportunities to source, qualify and leverage available data and intelligence related to a claim. It is important that all parties involved obtain as much information on the claimant as legally possible and as early as possible in the claim life cycle. Claimant lawyers should ensure they ‘Know their Customer’ and perform an ID check at the outset. Additional information that can be sourced and add value includes any linked claims that involve the claimant or the same third parties. Data and information related to the claim environment can also provide insight including any photographs available from the scene, telematics data, geospatial data and weather reports.
Having mined these potentially rich data sources, applying structured and sophisticated analysis will be key to achieving the best results. This involves interpreting the data to include in a psychological key and applying appropriate risk scores to underpin the investigation footprint. This smart use of data should expedite investigations and uncover synergies for interested parties including insurers, solicitors and law enforcement.
Insurance companies that can efficiently harness data to increase the speed and accuracy of their PI claims investigation will earn a reputation for their stringent counter fraud controls. This in turn can act as a powerful deterrent to the fraudsters looking for an easy win. Conversely, those insurers who have not yet embraced a data led approach to their investigations may see their fraud risk increase, as they become known to the criminal fraternity for their higher fraud tolerance processes.
The criminality targeting the insurance industry continues to evolve in an attempt to evade insurers’ counter fraud controls. The focus on whiplash claims has seen an increase in other PI claims where conclusive medical evidence can be difficult to obtain, including noise induced hearing loss and stress related psychological injury claims. CRIF is committed to responding to the needs of its clients and the insurance market and continues to work to develop fraud tools that address new and emerging risks.
Our aim is to support insurers in delivering an unequivocal and industry wide message to fraudsters: ‘You will be detected, disrupted and prosecuted.’
