Part One
ITEM NO.
REPORT OF THE CITY TREASURER
TO THE: LEAD MEMBER FOR CUSTOMER & SUPPORT SERVICES ON 22/11/10
TITLE: INSURANCE FRAUD INITIATIVE REPORT 2010
RECOMMENDATIONS:
The Lead Member for Customer and Support Services is requested to note the progress
made in performance and the effectiveness of Salford’s arrangements in relation to
reducing fraudulent insurance claims and protecting public funds.
EXECUTIVE SUMMARY:
The purpose of this report is to provide the Lead Member with an update of the
performance and effectiveness of Salford’s insurance arrangements in relation to
combating fraud.
Fraud is having a significant impact on resources at SCC. The public do not make the
link between fraudulent insurance claims and the quality of their services. This report
looks at what the Risk & Insurance service is doing to tackle this growing problem. It sets
out the steps it will take to make it harder for bogus claimants to succeed, and ways to
increase the effectiveness of our in-house services to help fight fraudulent claims e.g.
fictitious losses, incidents or injuries.
SCC has seen its claims stay stubbornly above the North West average with the
potential to cost the council up to £3 million annually. SCC and more specifically the
ARMU as part of the Finance arm of CSS are now making a conscious decision to make
sure SCC is not taken advantage of by potential fraudsters.
The City Council’s insurance arrangements continue to be reviewed regularly by Risk &
Insurance service (as the service responsible).
BACKGROUND DOCUMENTS:
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CIPFA Benchmarking report 2010-11
AUDIT & RISK MANAGEMENT –
Risk and Insurance Team Restructuring Proposal
In House Claims Handling Policy
ASSESSMENT OF RISK:
Insurance cover is purchased as a risk transfer mechanism where the authority feels
there is too much exposure to risk in funding a potential occurrence.
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SOURCE OF FUNDING:
The source of funding is the 2010/2011 revenue budget.
COMMENTS OF THE STRATEGIC DIRECTOR OF CUSTOMER AND SUPPORT
SERVICES (or his representative):
LEGAL IMPLICATIONS: Legal advice is considered not to be required in this instance
FINANCIAL IMPLICATIONS: Are covered in the report
PROPERTY (if applicable): N/A
HUMAN RESOURCES (if applicable): N/A
CONTACT OFFICER:
Cliff Peacock Corporate Risk Manager
Tel: 0161 607 6980
Cliff.peacock@salford.gov.uk
WARD (S) TO WHICH REPORT RELATE (S): All Wards
KEY COUNCIL POLICIES: N/A
DETAILS: See document attached.
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1. How do we intend to prevent fraud?
From 1st August 2010 insurance claims handling has been brought back inhouse. We have reshaped the team to facilitate this change and there are
now two Senior Insurance Officers dealing with personal injury claims / claim
handling and a trained Insurance Investigation Officer investigating every
personal injury claim.
Using a proactive approach the Insurance team will make every effort to
disrupt the activities of fraudulent claimants who think that local authorities
are easily exploitable. The team is committed to working in partnership with
both in-house and external services including the Police. The Insurance team
as part of ARMU is committed to thoroughly investigate every application for
compensation, and, while we recognise our responsibility to compensate
genuine claimants, we are not prepared to pay out for false or invented
claims.
Rigorous detailed checks, including the compilation of claimant and witness
profiles, coupled with a robust defence, have in the six weeks of start up,
brought savings of in excess of £110K.
2. How do we intend to detect fraud?
The ARMU are committed to staying one step ahead of the fraudster. By
putting revised insurance procedures in place as soon as possible, we are
now ready to deal with claims quicker, more effectively and more efficiently
and by taking the following steps to help detect fraud, we will:
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Validate every piece of information that is presented.
Refer suspicious claims to our in-house investigator or trained litigation
solicitor for an expert opinion.
Cross reference claimant’s personal details against in-house and external
records.
Visit the scene as soon as possible to obtain our own photographic
evidence.
Liaise with regional counterparts via claims database(s) available to
deliver a consistent approach in our prevention and sanctions.
Consider visual mapping of claims to see if a pattern emerges regarding
the location of incidents and claimants, (e.g. clusters of claims in a
particular area).
Cascade effective staff training in claim investigation techniques.
Introduce early intervention policies.
Check in-house records to establish if claimant has outstanding debts with
SCC.
Check for previous claims.
3. How do we intend to investigate fraud?
Dealing with individuals who set out to deliberately stage or fabricate a claim
is far more difficult if we are not totally prepared. As part of our strategy the
Insurance team will take steps to make it harder for a perpetrator of fraud to
be successful and as a result, detailed procedures and methods of verification
have and will continue to be developed.
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4. Examples of Investigations.
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A claim was submitted confirming that a trip had taken place at a specific area
causing the claimant personal injury. Photographs of the area were provided
by their solicitor. However after further investigations, including taking a
statement from an independent witness, it was established that the accident
had taken place in a completely different area. The investigation confirmed no
liability.
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During the course of an insurance investigation involving pothole damage to a
vehicle, details of an independent witness were checked in relation to their
home address and it was established that the witness was not registered at
the address provided and there was a claim at that address for Single Person
Discount in relation to Council Tax in a different name. Referral sent to
Council Tax.
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A claimant with a dental injury and a litigated claim had alleged that his
injuries were caused by a fall in a pothole. A Fraud-line call led to
investigations that revealed that he had been arrested by Police for being
“drunk and fighting” in a local pub. An investigation led to obvious connections
between witnesses at the scene. This claim is currently being investigated by
police and it is high likely that this may lead to a successful prosecution that
may provide much needed publicity to launch and publicise the Council’s
crackdown on Fraudulent insurance claims.
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A gentleman claims to have fallen as a result of a pothole on 3rd April 2010.
The gentleman was registered at the address he had provided to his solicitor,
along with his partner from 5th October 2010. Information has been provided
both verbally and in writing by the said partner confirming that claimant
vacated the address and moved to Scotland from 1st February 2010, over one
month before the accident allegedly took place.
Said partner has made a claim for Single Person Discount from this date.
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A claim was submitted for a trip in a pothole on a housing estate in Eccles.
The injuries stated were a broken metatarsal in left foot. The photographs
provided by the claimant’s solicitor were not clear in relation to the depth of
the pothole. Due to early intervention / site visit, it was established through
our own photographs that the said pothole was below 40mm resulting in no
liability to SCC.
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Claimant is stating that a Local Authority vehicle – Passenger Transfer Unit
for the elderly – reversed into his vehicle causing damage. He states that his
vehicle was parked when the defendant reversed into him. Claimant also
alleges that he had a passenger present. The driver of the Local Authority
vehicle has provided a witness statement confirming that it was the claimant
who had hit him. In addition to this there was no passenger present in the
other vehicle and the driver did not appear to be injured in any way.
A statement has also been taken from an independent witness confirming the
driver’s version of events. Claimant and alleged passenger submitted claims
for whiplash.
Full denial of liability for both claims due to witness statements taken.
5. A Proactive and aggressive claims procedures will:
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Send out a clear message that we will treat all fraud seriously, no matter how
small.
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Have a clear policy of litigation and cost recovery to ensure a fraudster
realises there is a consequence to their actions.
Target legal companies/solicitors that produce a high number of claims from
the same location.
Respond proactively if we are suspicious about a claim e.g. we will ask the
claimant's solicitor whether they have conducted their own enquiries to
establish the circumstances of the claim.
Create referrals to other departments / agencies – To date five referrals have
been sent to the Housing Benefit Investigation Team as well as two referrals
sent to Council Tax in relation to Single Person Discount.
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