Eyes on the public

Insurance companies are getting tough on fraudulent claims. Clare Arthur looks at the tricks of the trade

Visualise a film of a man helping to load a chest of drawers into a transit van. Nothing too unusual about that. But this man is claiming pounds 90,000 compensation for a car accident injury. He has told the insurance company - Norwich Union - that he is unable to lift his right arm above the horizontal.

The man is one of five fraudsters starring in a training video to help the insurance company's claims handlers learn how to detect false claims. The five werefilmed by private detectives to give Norwich Union proof that their claims (for a total of pounds 750,000) were either exaggerated or completely fraudulent.

Insurers are increasingly turning to private detectives to check out suspicious claims - particularly if they involve large sums. Much of the work is covert and may involve the claimant being followed and filmed for several weeks. This may seem an outrageous intrusion of privacy but Mike Hart, national claims manager for Norwich Union, believes such action is justified. "We do have success in detecting fraud by using private investigators," he says. "We only use professional firms which abide by our code of conduct and which do not use methods of entrapment."

The Association of British Insurers (ABI) has calculated that one in 20 insurance claims in 1995 were fraudulent, costing the industry pounds 261m. This figure does not include life insurance fraud.

Policyholders who have suffered delays and problems getting genuine claims paid may be inclined to shrug the issue off, or even wish the fraudsters luck. Insurers, however, emphasise that fraud increases their costs and therefore pushes up premiums. In effect, honest customers pay for the fraudsters.

Peter Smith, technical and marketing consultant for Didcot-based James Harris Investigations, says genuine claimants will never know if they have been watched. Evidence is only presented if the detective and insurer are sure that fraud is being attempted. The firm uses black-windowed vans and video equipment to catch out people who make false claims on income protection policies - which pay out when you are unable to work through illness or accident.

Mr Smith says just over half their investigations show claimants are able to work."Most claims start out as genuine," he says. "But when the claimant recovers, they find they like receiving the payout and decide to fake the symptoms. Others change their occupation without declaring it to the insurer. We've had all sorts: ambulance drivers, shop owners, construction workers, HGV drivers, hoteliers. Even professionals are not averse to making false claims."

Chris Dore, personal claims manager for Eagle Star, says a worrying trend in staged car accidents has spread to the UK from the United States and Ireland in the last few years. "This normally involves a vehicle which has been obtained for the purpose: a hire car, an insurance write-off, or a car which has been deliberately damaged," he says. "Two or three of these cars are put together to create an accident."

The claims then start to roll in: for damage to the cars, hiring a replacement while repairs supposedly take place, and especially - and more expensively - for personal injury to the occupants. Even simple whiplash can incur claims of pounds 1,000 or more.

Peter Taylor, development director of Manchester-based investigation agency Taylor & Moore, says faked crashes are prevalent in inner city areas, particularly Manchester and Liverpool. "Twenty five per cent of our workload is now staged accidents," he says. "At any one time we are checking out 200 possible fake crashes."

Taylor & Moore uses databases such as the Motor Insurers' Anti Fraud and Theft Register (run by the ABI) to identify stolen cars, false plates or non-existent cars - known in the trade as "ringers" or "ghosts". The firm's investigators, who are all ex-police officers, also look for other tell-tale signs of a faked crash, such as close connections between the drivers, passengers

and witnesses who may be work colleagues, neighbours or relatives. They often switch roles from one faked crash to another, but the same names keep cropping up.

Life insurance fraud is less common, but can involve multiple claims totalling more than pounds 1m. Andrew Young, of Maidenhead-based Linden Management Services, specialises in finding foreign nationals who have supposedly died, giving surviving relatives a claim on any life insurance policy.

The firm investigates more than 60 cases a year and has worked in 30 countries including India, Pakistan, Nigeria, Ghana, Columbia, Iran, the Lebanon and Vietnam. Mr Young says 70 per cent of investigated cases are fraudulent, 28 per cent genuine and 2 per cent unproven. He has saved insurance companies pounds 63m since 1983.

"This type of fraud tends to happen in countries where corruption is rife," he says. "It is simple to get hold of fake documents and easy to lie low."

In one case, Mr Young discovered that all the documentation relating to the death of a young Sri Lankan woman was false. Her husband had claimed pounds 142,000 on life insurance policies after she was admitted to hospital in Sri Lanka suffering from diarrhoea and later "died".

"I discovered she had never been in hospital, her body was not buried in the cemetery where it was supposed to be, and the doctor who signed the alleged death certificate was in fact an elderly clerk at the hospital who admitted he had been paid to fake the document," he says.

The husband was charged with attempted fraud, and sentenced to four years in prison. His "dead" wife was arrested while visiting him, although both partners claimed she had no knowledge of the crime.

Mr Young says: "Most of the people involved are opportunist thieves - from vicars to factory workers - who pretend to be dead." But, he adds, some cases can be much more sinister - involving murder.

"Men bring a wife into the UK, commonly from India or Pakistan, take out a policy on her life, take her back abroad and have her murdered," he claims. "We've had them plugged into power sources, run over by tractors, killed in hit-and-run accidents. When you investigate, the husband is usually involved."