The Insurance Institute of Dublin

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• The Insurance Institute of Dublin
• Welcomes you to
• The CPD Lecture with
• Mr. Willie McGee, Fraud Manager, AXA Insurance
• Fraud Insurance
• Thank you for your continued support.

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Insurance Industrys Fight Against Fraud

• Willie McGee
• Fraud Investigation Manager
• AXA Insurance
• 30th. September 2009

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Special Investigation Unit

• My previous position
• Deputy Director of GBFI
• Garda Siochana background
• Fraud Investigation since 1975
• Fraud changes

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Fraud Facts

• AXA Survey.
• (1200 people 02 IIF 03)
• 54 (31) Would make a dishonest claim if they
  knew they could get away with it.
• 75 (72) Respondents said others exaggerate
  claims
• 20 (30) Think dishonest claims have little
  impact on Insurance Companies

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Legislation

• Criminal Justice (Theft Fraud) Offences Act
  2001
• Deception
• Provide service (False Documents)
• Government interest
• Courts awareness / Sentences
• Civil Liability Courts Act 2004
• PIAB

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The Fraudster

• Can be just about anyone.
• Plausible Likeable.
• Habitual Criminal or opportunist.
• Will always have a lot of confidence placed in
  them.
• Oftentimes has exclusive control and not
  subjected to strict supervision.

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Profile

• Usually combination of three factors
• Motive Hidden financial need.
• Opportunity Belief that the fraud will go
  undetected
• Defective set of values right to slice of cake.

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Beginning

• In September 2002 Axa set up a Special
  Investigation Unit (SIU) dedicated to fight
  against fraud in the industry.
• Different expertise
• Successful - exceeded every target set.
• Other Companies followed (More or lesser degree)

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Our Strategy

• To combat and to rigorously investigate all
  alleged frauds.
• To pursue perpetrators.
• To seek redress and consider prosecution in every
  instance.
• To actively co-operate with the IIF, Gardai and
  members of the Financial Services Industry to
  devise, implement and operate prevention
  methodologies.

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Claims Fraud Process

• P.Is
• Investigating Gardai
• Insurance Link
• VAT verification.
• Motor Tax /Driving License Offices.
• Key Analysis
• Interview claimants/statements.
• Claims staff awareness/Red Flags

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Staff Awareness

• Meaning/Understanding Fraud
• Simple meaning An act, undertaken with the
  deliberate intent of deceiving the Company to
  gain financial advantage for oneself or others
  (Umbrella term)
• Fraud is a crime based on concealment, victims
  are oftentimes not aware until its too late
• Fraud Prevention is like any other business it
  must be planned for in advance

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SIU Approach

• Proactive
• Under-writing / Customer Care / Prevention plan /
  Contingency Plan
• (Understand the organisation/Aware of areas at
  risk. Develop measures to address risk)
• Reactive
• Quick to discover / Identify Assess the risks
• Advice
• Incept possible risks not definite risks

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Red Flags

• Set of circumstances
• Signal for further investigation
• Not an indication of guilt
• Warning sign for fraud
• Be able to recognise
• Do not ignore

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WHAT IS A RED FLAG

• RED FLAG A red flag is a set of circumstances
  that are unusual in nature or vary from the
  normal activity.
• It is a SIGNAL that something is out of the
  ordinary and may need to be investigated further.
• Remember that RF do not indicate guilt or
  innocence but merely provide possible warning
  signs of fraud.
• Do not ignore a red flag.
• The responsibility for follow up investigation of
  a red flag should be placed in the hands of a
  measured and responsible Unit such as our SIU.

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Workplace Red-Flags/Enemy Within

• Anyone asking to use your password.
• Someone working on a PC thats not theirs
• After a break finding your PC locked as result of
  incorrect password entry.
• Being asked to clock in or out for another
  colleague.
• Someone requesting you to circumvent controls.

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International driving licences
At present there are over 110 models of driving
licences in circulatation within the EU. As a
result, the EU commission, since 2000 have
published the Driving Licence models guide in
order to assist enforcement and control
authorities in supporting the principle of mutual
recognition between member states. The Book
shown here will advise you on some of the
security features outlined in this guide of over
300 common licences in the world outside USA and
Canada
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Check the licence - Features (Irish How to spot
from a copy)
Stock / Issue number is unique on genuine Licence
is one of a list on Forged Licences it is not
unique
Man on seat is present on Genuine Licence is not
on Forged Licence
Font Always thinner on Genuine Licence thick
and blockey on Forged Licence even on a copy
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Check the licence - UV features (Lithuania)
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Check the licence - UV features (Polish What
you should see)
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Driving Licences

• 2012 Common Credit Card style European Licence
• 2032 All old Licences phased out
• All Licences will have UV features which will be
  common to all licences

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What can you do

• There is a detective in everyone of us
• Use your own initiative and report any
  suspicions to your SIU no matter how
  insignificant it may seem
• If you prevent fraud from occurring at
  inception, you may be preventing an even bigger
  chain of events from occurring down the line

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Recent fraudulent No Claims Bonus received
Both of these No Claims Bonus originated from
Romania and if not detected as fraudulent would
have cost the company 1,400 on loss of the
correct rating of risk. In addition it will deter
the type of policyholder we wish not to insure.
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Some Fraud Facts

• Typical organisation loses 6 of annual revenue
  to occupational fraud. (Data CFE Report on Occ.
  Fraud 2008).
• Remember!
• Revenue Fraud Losses Costs Profit
• 60 of frauds uncovered involve
  collusion with people outside the company.
• Tip-offs, mainly from employees, account for
  nearly 40 of all initial detections of fraud
  (ACFE 2008 report on Fraud)
• We estimate that up to 15 of HH and 10 of our
  motor claims have some element of fraud attached

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Detecting Customer Deception

• Inconsistencies in facts presented
• Sudden behaviour changes
• Insincere emotions
• Contradictions
• Detailed knowledge of Claims process
• Gut reaction

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More Facts

• Average armed robbery nets 20K with an 80
  chance of being caught.
• Average fraud by employee nets 200K with a 20
  chance of being caught.
• Conversely the robber with arms will get 5 times
  stiffer penalty than the fraudulent employee.

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Protocol

• Perception / No interest.
• IIF Fraud Working Group.
• Garda meetings.
• Protocol set up/Signed off.
• Success at last.
• Training (handling of exhibits i.e. originals and
  forensic analysis)

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Confidential Line

• IIF Advertising Campaign (Launched February
  2003)
• 1890 333 333
• Results (Up to Dec.31st. 2008)
• Reports over 3500
• 67 Motor related injury / damage
• 22 Personal injury including employee public
  liability
• 8 Property damage
• 3 False insurance papers various other cases

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Non-Claims Fraud(The Enemy within)

• Work closely with Risk
• Theft of money
• Intellectual property
• Staff awareness of company policy
• Hard to estimate the cost

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The Future

• What needs to be done ?
• Judges/Courts realisation
• Keep Conspiracy
• Insurance Link update
• Non-competitive issue /joined up approach across
  the industries
• Staff incentives
• Total co-operation in continuing fight.

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The Future

• Top Down Strategy ?
• Preservation of Reputation
• Do not reduce investment
• Prevention ?
• Compliance ?
• Good investment ?
• Good Faith Reporting ?
• Central Fraud Bureau ?
• Fraud Plans-mandatory ?
• Data Sharing ?

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The Future

• Current Climate- Is it a breeding Ground?
• Increases reported- 7- 31
• China - Cancer
• Korea - Legs
• Ireland

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How Fraud can affect your business

• Employee Lifestyle at variance with income
• Excessive hours No holidays No delegation
• Temporary coming in / taken on permanently have
  you checked their reference ?
• Supplier dealing with a particular member of
  staff only
• Three Types
• Those who will never do it
• Those who will always do it
• Those who will do it if they are let
• The trick is to know who you are dealing with and
  to get rid of the weakest link

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My thought for the day!

• EXPERIENCE is what you get from reading the small
  print in a contract and
• EDUCATION is what you get from not reading it