Introduction 1
Chapter 1What is Insurance Fraud?How Does the Law View It? 3
What is insurance fraud? 3
The United Kingdom 3
Case law 5
The burden of proof 6
Perjury 7
The United States 8
Bad faith litigation 10
Chapter 2The Typical Insurance Fraudster—Is There Such a Thing? 15
Who is a typical fraudster? 15
The “average” insurance fraudster 15
The “criminal” offender 15
Organised criminal gangs 16
The motives for fraud 16
Financial difficulties 16
“Getting what we are entitled to” 18
Chapter 3Insurance Fraud Indicators 19
Insurance fraud indicators 19
Property claims 19
Disaster fraud 20
Vehicle theft aud 20
Casualty claims 20
Staged accident fraud/personal injury fraud 21
Chapter 4 Fraud in Insurance Law Generally 23
Defining Fraud 23
Objectives of the civil law 23
Fraud in a civil context 23
Fraud in contractual negotiations 24
Post-formation fraud 25
Fraudulent claims 26
Fraudulent claims defined 26
Use of fraudulent means and devices in the pursuit of a claim 26
Something less than fraud? 27
Substantial falsehood and the de minimis limitation 27
Determining what is substantial 28
Materiality and inducement 29
Maintaining a non-genuine claim 30
Suppressing a defence 30
The consequences of making a fraudulent claim 31
Express contractual provision 31
No express provision 32
The effect of fraud on the claim 32
Rejections of earlier claims 32
Rejection of any honest part of the claim 34
The effect of fraud on the contract of insurance 35
Damages 36
Post-litigation fraud 37
Chapter 5 Fraud in Marine Insurance Law 39
Fraud in marine insurance law 39
Fraudulent means and devices clauses in International Hull Clauses 39
Materiality and inducement: the industry approach 42
Maintaining a non-genuine claim 43
Suppressing a defence 43
The consequences of making a fraudulent claim 43
Express contractual provision 43
Rejection of earlier claims 44
IHC and avoidance of the contract 44
Post-litigation fraud 45
Chapter 6 Fraud in the Reinsurance Law Context 47
Fraud in the reinsurance law context 47
The rights of the reinsurer 48
Non-payment of the premium by the reinsured 48
Express contractual provision 48
No express provision 48
Risk of affirming the reinsurance contract 49
The inspection of the reinsured’s records 49
Should court proceedings be stayed so that reinsurers may conduct an inspection of the reinsured’s records? 52
Risk of affirming the reinsurance contract 52
Audits 53
Pre-contract audits 53
Underwriting audit 53
Claims audit 53
Grounds for denying liability 54
Types of fraud 54
Incorrect circumstances surrounding the loss 54
Inflated claims 54
False description of the subject matter of the loss 55
Statements concerning compliance with contractual conditions 55
Notification of claims 55
Payment of claims 57
“Follow the settlements” 58
What is it? 58
The“follow the settlement”criteria 61
To check coverage under the original policy 61
To investigate the claim and settle it in a“professional”and“businesslike”manner 61
Ex gratia payments 63
Claims handling by agents 63
That the loss is covered under the reinsurance contract 64
Can the reinsurer still investigate claims where there is a“follow the settlement”clause? 65
The reinsurer’s right to inspect the records of the reinsured 65
What if the original insured has been fraudulent? 66
What if the reinsured has been fraudulent? 66
Claims co-operation clauses and“follow the settlement”clauses 66
What is the position where there is no“follow the settlements”clause? 68
What if there is no“follow the settlement”clause in the contract—can one be implied? 68
Claims co-operation clauses and claims control clauses 71
Claims co-operation clauses 71
Claims control clauses 72
Chapter 7The Insurance Industry’s Response 75
The insurance industry’s response 75
The UK approach 76
The Serious Organised Crime Bureau 77
The Association of British Insurers 77
The Crime and Fraud Prevention Bureau 77
Changing public attitudes to insurance fraud 78
The ABI’s role as crime preventor 80
The ABI“cheatline” 81
Liaising with the police 82
Fraud prevention databases 84
The Motor Insurers Anti-Fraud and Theft Register（MIAFTR） 84
The Motor Insurance Database（MID） 85
The NSGenius database 85
The income protection register（PHI） 85
The premium instalment closed user group 85
The art loss register 86
Uninsured loss recovery database 86
The intelligence database 86
The Northern Ireland personal injury anti-fraud register（NIPAR） 86
The Claims and Underwriting Exchange（CUE） 87
Arson database 88
Links Analysis software 88
Does the Ombudsman have a role to play in relation to insurance fraud? 88
Case summaries 89
Case 21/1 89
Case 21/3 89
Case 21/4 90
The insurers’own initiatives in the fight against insurance fraud 92
Internal fraud units 92
Outsourcing of fraudulent claims investigations 93
Computer and psychologically based fraud screening systems 94
ICON 94
Hunter 95
Voice stress analysis 95
Checking the validity of documents 96
Claims replacement 97
Example 1—“On your bike” 98
Example 2—“Don’t drop your laptop” 98
Example 3—“See you in Courts” 99
Example 4—“All that glitters is not necessarily gold” 99
Co-operation 100
The future? 101
Chapter 8Recent Developments—A Hindrance or a Help to Tackling Insurance Fraud? 103
Recent developments—a hindrance or a help? 103
Developments in the claims handling area 103
Call centres—speed is of the essence 103
The claims code 104
Claims cards 105
Computer-based developments 106
Vehicle inspection equipment 106
Selling insurance products over the Internet 107
Settling claims over the Internet 109
Legal developments 110
The Woolf reforms 110
Human rights/data protection 111
Chapter 9The Approach of Other Countries to the Problem of Insurance Fraud 115
The United States 115
Staged accidents 115
State action 116
Reward schemes 117
Convictions/punishments 117
Insurance fraud bureaus 118
The Massachusetts Fraud Bureau 118
The New York Insurance Fraud Bureau 119
The National Insurance Crime Bureau（NICB） 120
The Federal Bureau of Investigations（FBI） 121
Fraud prevention databases 121
PILR（Property Insurance Loss Register） 121
View Link Manager 121
InfoGlide Fraud Investigator 122
Claims Scoring Systems 122
DBT Online Incorporated 122
NetMap 123
The effectiveness of fraud databases—some examples 124
Predictive technology 125
Layered voice analyser 126
Legislation 126
Fraud training 127
Public perceptions 127
Celebrating successes and rewarding efforts 128
Insurers’ initiatives 128
Fraud Defense Network 129
The Coalition Against Insurance Fraud 129
Outsourcing fraudulent claims investigations 129
Canada 131
The Canadian Coalition Against Insurance Fraud 132
Public perceptions of insurance fraud 132
Manitoba Public Insurance 133
Australia 133
Fraud prevention databases 134
Reward schemes 135
Litigation 135
Legislation 135
Case law 136
New Zealand 136
Fraud prevention database 137
South Africa 137
Fraud prevention database 138
Fraud units/detection techniques 138
Fraudline 138
Continental Europe 138
Europe-wide initiatives 138
Germany 139
Fraud problems 140
Anti-fraud measures 141
Call centres 142
France 142
Spain 143
Italy 144
Anti-fraud measures 145
The Netherlands 145
Switzerland 146
Scandinavia 147
Norway 147
Sweden 147
Denmark 148
Finland 148
Chapter 10 Conclusions 149
Conclusions—tackling fraud—the way forward 149
Anti-fraud bureaus 149
Changing public perceptions of fraud 150
More prosecutions of offenders by insurers 151
Tougher penalties needed 151
Closer work with the police 152
Closer co-operation between insurers 153
Closer co-operation with brokers 153
Closer co-operation with other bodies 154
In-house fraud units 154
Call centres 154
Internet insurance policies 155
Marketing information 155
Warnings on claim forms 155
Make effective use of the information technology systems and databases available 156
Vehicle repair systems 156
Cheatlines/fraud lines 156
Rewards schemes 156
Data protection 157
Reinsurers 157
Bibliography 159
Index 167