1. © Weightmans LLP CFOA Health & Safety Practitioners and Safety Reps Seminar 2009 Claim Fraud Andrew Gillett Partner 0121 200 7566 andrew.gillett@weightmans.com 8 th October 2009

2. © Weightmans LLP In Scope ▪What is Fraud? ▪The extent of the problem, some facts & figures. ▪Common manifestations of Fraud. ▪Fraud Indicators. ▪Prevention, sanctions & enforcement. ▪Is it relevant to me?

3. © Weightmans LLP Out of Scope ▪Claims handling & investigation. ▪Procurement & supplier fraud. ▪Insider & employee fraud. ▪Mortgage & protected income fraud. ▪Holiday & property fraud. ▪Boiler room & mass marketing fraud. ▪“Ponzi”, investment & advance fee fraud.

4. © Weightmans LLP What is Fraud?

5. © Weightmans LLP Legal Definitions ▪Agapitos v Agnew [2003] QB 556 “A fraudulent claim exists where the insured claims knowing that he has suffered no loss, or only a lesser loss than that which he claims, or is reckless as to whether this is the case.” ▪Theft Act 1968, section 15(1) “A person who by any deception dishonestly obtains property belonging to another with the intention of permanently depriving the other of it shall….(be guilty of an offence).

6. © Weightmans LLP The Fraud Act 2006 ▪Fraud by false representation (section 2). ▪Fraud by failing to disclose (section 3). ▪Fraud by abuse of a position of trust (section 4).

7. © Weightmans LLP The extent of the problem ▪The annual cost of fraud in the UK is estimated at £14 billion. ▪£231 for every man, woman & child in the country. ▪Fraudulent insurance claims cost £1.7 billion per annum, adding 5% to premiums, £40 per policy. ▪One in ten Britons commit insurance fraud.

8. © Weightmans LLP Victimless Crime ▪Commercial Insurance Fraud Study. ▪11% - Acceptable to invent or stage an accident. ▪27% - Easy to invent / stage an accident. ▪24% - Exaggeration is acceptable. ▪37% - Easy to get away with exaggeration. ▪20% - Acceptable to falsely attribute an injury to work.

9. © Weightmans LLP Insurance Fraud ▪Road Traffic Claims. ▪Low speed impact, MIST, LVI. ▪Phantom passengers. ▪Induced / semi staged collisions. ▪Staged / contrived collisions. ▪Fabricated & exaggerated losses. ▪Public, Employers & Occupiers Liability. ▪Disease.

10. © Weightmans LLP Low Velocity Claims ▪Indicators: ▪Speed <5mph - “I was travelling at walking pace”. ▪Glancing & reversing collisions. ▪Minimal or no visible damage to the vehicles. ▪Issues: ▪Complex expert evidence. ▪Credibility. ▪Low value –v- Claims costs.

11. © Weightmans LLP Phantom Passengers ▪Indicators: ▪Claims exceed the number of occupants. ▪Claimants description inconsistency. ▪Claim delay & late notification. ▪Issues: ▪Credibility. ▪Clarity. ▪Consistency.

12. © Weightmans LLP Staged Collisions ▪“A collision that is caused deliberately by a third party / parties acting independently (induced / semi staged) or with the active involvement & collusion of the policy holder (staged / contrived) for the purpose of personal gain or to cause loss to another”.

13. © Weightmans LLP Induced / Semi Staged Collisions ▪Indicators: ▪Unnecessary or unexplained collision. ▪“Stooge” vehicles. ▪Targeting & vulnerable vehicles. ▪Issues: ▪Credibility. ▪Witness availability & cooperation. ▪Physical evidence.

14. © Weightmans LLP Staged / Contrived Collisions ▪Indicators: ▪Intelligence. ▪Inconsistency. ▪Implausible perfection. ▪Issues: ▪Indemnity. ▪Investigations & evidence. ▪Complexity.

15. © Weightmans LLP Fabricated & Exaggerated Claims ▪Indicators: ▪Lacking supporting evidence. ▪Vague, amateurish (novelty) documents. ▪Unusual / high value losses. ▪Issues: ▪Evidence. ▪“Legal Negotiation” ▪Intent.

16. © Weightmans LLP Liability & Disease ▪Emerging risks. ▪Slips & trips. ▪Industrial injury.

17. © Weightmans LLP Risk & Sanctions ▪High value & low risk ▪Injury damages£12,500 ▪Credit hire£7500 ▪Recovery & storage£2500 ▪Vehicle damage£8000 ▪Legal costs£20,000 ▪Experts fees£2000 ▪TOTAL£52,500

18. © Weightmans LLP Fighting Back ▪Criminal Prosecution. ▪Perjury. ▪Fraud Act 2006. ▪Civil Prosecution. ▪Tort of Deceit. ▪Exemplary damages. ▪Enforcement. ▪Private Prosecution. ▪Contempt proceedings.

19. © Weightmans LLP Is this relevant to me? ▪Moral obligations. ▪“Guardians of the Public Purse”. ▪Who benefits? ▪Opportunist personal gain. ▪Organised crime & trafficking. ▪Terrorism.

20. © Weightmans LLP Thank you for listening.