A CEO’s Viewpoint.
By
John Eves BA;MBS;FCCA;FCILA;Fuedi-ELAE
Managing Director, Thornton & Partners
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Joined T&P in 1983
Specialised in BI and “Fidelity”
Joined Board in 1989
Managing Partner in mid 90’s
Approx 250 people, 10 branches
Standard PD, BI, Injury and Desk
Specialist companies in Marine,
Engineering,Counter Fraud, Jewellery,
Fulfillment
Three Functional Distinctions
 Insurance definition suggests fiction or
exaggeration
 Fidelity Guarantee – e\e fraud, bank & bonds
 Transaction Fraud – Stewardship aspect
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We are the Response Team, the Reactors
Our actions are governed by the problem
presented
Investigative strategy governed by scope of
the problem presented
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Is it old fashioned “proper” adjusting?
Is it a reclassification of what we already do?
Is there a standard unit of measurement?
When is a fraud not a fraud?
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The difference is one of degree
Lawyers present can comment on the
continuum from:
Inflated view – overstatement- fraud
We all measure fraud differently
Is our classification sufficiently robust – no.
Where do all these numbers come from?
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Good Adjusting Practice & Management
Intake- point alerts at Agent\Insurer\Adjuster
Initial professional assessment, pre
inspection
Conversation Management techniques
pre\post visit
On-Site work
Forensics, PI& MI
“Fraud is proven when it is shown that a false
representation has been made:
knowingly;
without belief in it’s truth, or
recklessly, careless whether it be true or
false.”
(Derry v Peek 1889)
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It didn’t happen
Set-up or Contrived
Deliberate
Genuine peril, but exaggerated
Not covered, but made to fit
No insurable interest
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Fraudsters exploit simple weaknesses
Don’t look for the complex
Look for the blindingly obvious
Traditional alerts, followed up by diligent
work
The answer lies in best practice systems
Customer service protocols- a fraudster’s
weapon
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Errant behaviour more often caused by
systems, not people
People with malintent exploit those system
weaknesses
They don’t often create them
In summary, opportunities present
themselves
When looking for fraud, try this angle
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What is the mission \ vision of the
organisation
How is that manifested in actual behaviour
Percolation factor
What is the character of the working
environment
Is it supportive, fearful, turbulent
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Procedures
IT Usage
Internet Usage
Photographs
General PC Access
Maintenance and Change Routines
Firewalling
Management
Compliance
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Independent verification
Division of Duties
Internal Audit
Fraud Lines & Registers
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All investigation: Service, Cost, Expectation
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The big savings are in prevention, more than
absolute detection
Reducing financial crime: an FSA statutory
objective
Insurance industry is not the law.
We gather facts
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What training do you get\give
What protocols are in place to protect e\e’s
What do the protocols say about referrals
Is it easy or rewarding to refer
For those who take the escalation baton:
Are you trained in interview techniques
Are you aware of DPA constraints
How safe are your files and mails
According to the ABI
10% admitted to their last claim being fraudulent
50% knew ‘someone’ who has committed ins
fraud
 63% are thought to have made honest and
truthful new applications for household, motor
and holiday insurance
 The public believed 41% were completely false.
 Estimated £1.9bn insurance fraud p.a.
 £44 per policy is absorbed cost for claims fraud
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It’s our job
Helps keep claims costs down
This has Solvency and Reserving
implications
The Regulator says so
Right customer signal
In theory, honest claimants get through
faster
In theory, better resource matching &
allocation
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Increased effort & process is costly
Is effort rewarded
Is outcome measured
Information sharing is inadequate
Burden of proof is high, so how good is the
work
Volume processes present opportunities
Thank You