Industry and government making progress on plans to tackle insurance fraud

Notable initiatives in 2016 included revisions to industry best practice guidance on application fraud, and commitments by the insurance industry to extend funding support for the Insurance Fraud Register for a further three years, until 2019/20, according to the report by HM Treasury.

The Insurance Fraud Taskforce was set up by the government in January 2015 to investigate the causes of and recommend solutions to reduce the level of insurance fraud. It was chaired by David Hertzell of the Law Commission and made up of representatives from the Association of British Insurers (ABI), the British Insurance Brokers' Association (BIBA), Insurance Fraud Bureau, Financial Services Consumer Panel, Citizens Advice and the Financial Ombudsman Service.

The final report of the task force was published in January 2016, containing 14 recommendations for the government and industry. These included better collaboration on data-sharing initiatives aimed at reducing insurance fraud; increasing membership of existing anti-fraud schemes and databases; and more of a role for price comparison websites and other 'aggregators' in the fight against fraud.

The task force also recommended that industry bodies, including the ABI, should team up to develop a long-term cross-industry public communications strategy, aimed at tackling misconceptions about insurance fraud as a 'victimless' crime and improving consumer understanding of insurance products and claims processes. The ABI and the Financial Crime Committee have now approved comprehensive terms of reference for this project, and work to recruit dedicated resource to lead scoping work for the strategy has now started.

Use of the MyLicence service, which provides insurers with access to driver data held by the DVLA, increased by around 10% over the course of 2016, and is now used by around 36% of the market, according to the update report. A new communications plan is now being developed to help promote MyLicence. The Motor Insurers' Bureau (MIB), which controls the central Claims Underwriting Exchange (CUE) database, is pursuing a programme of work to improve the quality of CUE data and make CUE easily available at the point of quote.

Over 80% of ABI general insurers are now members of or have agreed to participate in the Insurance Fraud Register, which is an industry-wide database of known insurance fraudsters. The insurance industry has extended its funding commitment for the register for a further three years. Work is underway to extend membership of the register to non-ABI insurers, according to the Treasury report.

The Treasury met with the top four general insurance aggregators by market share in order to discuss the task force recommendations applicable to them during 2016, according to the report. It found that, collectively, the aggregators welcomed the task force's report and recognised that they have "both a commercial incentive ... and moral obligation to tackle insurance fraud".

A number of "practical barriers" to greater use of fraud databases and data sharing schemes by aggregators emerged during discussions, according to the report. These included the lack of commercial incentive for aggregators to sign up to initiatives like MyLicence until these are adopted more widely by the industry, and the fact that data protection law prevents aggregators from holding on to customers' 'unique identifiers', such as driving licence numbers.

Engagement has continued with aggregators on a one to one basis with a view to initiating pilot data sharing projects to assess the value of aggregator data in enhancing the industry fight against fraud, according to the report. Three major aggregators have also signed up to the ABI's revised application fraud guidance, it said.