Organised fraud
The Association of British Insurers’ (ABI) most comprehensive analysis yet into insurance fraud published this week highlights that every minute an insurance fraud is now detected in the UK. For the first time, the ABI’s annual detected fraud figures include data on application fraud – where details such as age, address, or claims history are deliberately miss-stated.
A total of 562,000 insurance frauds were detected by insurers in 2017 and of these there were 113,000 fraudulent claims, and 449,000 dishonest insurance applications. The number of dishonest insurance claims, at 113,000, were valued at £1.3 billion. The number was down 8% on 2016, while their value rose slightly by 1%. The fall in number reflects the industry’s collaborative work in detecting and deterring fraud.
The number of organised frauds, such as staged motor accidents, fell 22% on 2016, with frauds worth £158 million detected. This reflected the work of the Insurance Fraud Bureau (IFB), who are currently investigating a rising number of suspected frauds, and the Insurance Fraud Enforcement Department (IFED). IFED is the specialist police fraud unit investigating insurance fraud, such as staged motor accidents and illegal insurance advisers (so-called ghost brokers). Since its formation in 2006, IFED has secured over 400 court convictions for insurance fraud. The value of fraudulent detected motor insurance claims, at £775 million, rose by 4% on 2016. The number of these frauds, at 67,000, showed a small rise.
Fraudulent property insurance claims fell. The number detected dropped by 11% on 2016 to 22,000, with a value of £100 million. Insurers detected 449,000 cases of confirmed or suspected application fraud, where people lied or withheld information to try and get cheaper cover. Motor insurance made up the bulk of dishonest applications, with typical lies including the nature of the applicant’s occupation, and driving record, where previous claims and motoring convictions were not disclosed.
A cyclist claimed £135,000 compensation from a council for injuries he said he sustained when he fell off his cycle after hitting a pothole. However, evidence showed that the accident happened when he fell off on a slippery road at another location. He was jailed for three-and-a-half years. In another example, a bodybuilder, who claimed £150,000 for a back injury, was exposed when he was filmed doing a press-up challenge. He was ordered to pay £35,000 in legal costs. The ring leader of a gang who staged a bus crash to try to get £500,000 in insurance pay-outs for fake injuries was jailed and banned from driving for two years. Using a rental car, he staged the crash, following which eight of his fellow fraudsters on the bus claimed for fake injuries to necks and hips. Finally a student was convicted after attempting to claim £14,000 through six invented claims following a trip to Venice, including the alleged loss of an iPod, laptop and designer watch.
Loopholes
It was only relatively recently, in 2015, that the Financial Ombudsman (FOS) shared their insight into banking complaints involving telephone fraud. In those days it appeared that as older people were more likely to use landlines meant they were particularly at risk of “no hang up” scams.
But, according to their latest review in today’s connected world, it’s often loopholes in new technologies, rather than in old ones, that fraudsters are using to their advantage. FOS highlight that the first step toward being scammed for an individual may be putting their details into an identical, but fake banking website – or responding to a text message that, on the face of it, looks like it’s from their bank.
Unlike most other complaints FOS see, complaints about fraud and scams involve – whether it’s accepted or suspected – the actions of a criminal third party. So it’s understandable that, in many cases, both the bank and their customer tell FOS in strong terms that they’re not responsible for what’s happened.
This makes it harder for FOS to reach an answer that both sides are happy with. But it doesn’t mean usual standards don’t apply. As case studies from FOS illustrate, they will expect to see clear evidence that banks have investigated thoroughly – and reflected hard on what more might have been done to protect their customers and their money.
FOS also often hear from banks that their customers have acted with “gross negligence” – and this means they’re not liable for the money their customer has lost. However, according to FOS, gross negligence is more than just being careless or negligent. And as their case studies show, the evolution of criminals’ methods – in particular, their sophisticated use of technology and manipulative “social engineering” – means it’s an increasingly difficult case to make.
If there’s anything to be salvaged in the wake of fraud and scams, it’s what everyone can learn about how they happened and what needs to change.
Party Hard
Eating a large meal could help detect early signs of metabolic conditions such as type 2 diabetes, according to new research the British Heart Foundation part-funded, published in the journal Cell Reports. A team of researchers, led by Dr Samuel Virtue and Professor Toni Vidal-Puig of the Cambridge University Metabolic Research Laboratories and the Medical Research Council’s (MRC) Metabolic Diseases Unit, have made the observation whilst studying a gene called PPARy2. This gene controls the formation and function of fat tissue, which stores energy in the form of fat.
Researchers found that in mice that lack PPARy2, lipids – a form of free fat – were not sufficiently stored in fat tissue and were redirected to other organs, which is an early sign of metabolic disease and diabetes. Although the young mice without PPARy2 looked ‘healthy’, they went on to develop insulin resistance (the process that underlies early diabetes) as they got older. The glucose tolerance test (GTT) is a diagnostic test used routinely to detect diabetes. A glucose drink is taken after a period of fasting and the test measures how well the body’s cells are able to absorb glucose.
When the team performed the GTT on the mice without PPARy2, the results were similar to normal mice. But when they replaced the glucose in the GTT with a large, fatty meal – equivalent to eating a Christmas dinner – signs of metabolic disease emerged, including 10 times the levels of insulin found in normal mice given the same fatty meal, increased blood glucose and increased blood fatty acids. The researchers believe this is because PPARy2 is especially important in clearing free fats from the blood quickly after a high fat meal by storing them inside fat tissue. In mice without PPARy2, the fat tissue was overwhelmed by the high fat meal and the lipids built up in the blood or were redirected to other organs, eventually leading to insulin resistance as the mice aged.
Together with Professor José Manuel Fernández-Real, of the University of Girona, the team also demonstrated that PPARγ2 levels in humans are lower in obese individuals, demonstrating that their findings could also be relevant to humans. The study was jointly funded by the British Heart Foundation (BHF), MRC and Wellcome.
Lenders ordered
UK Finance has published their data showing mortgages lending by their members in 2017. The figures show their members’ gross mortgage lending in the latest calendar year and balances outstanding at the end of 2017, rounded to the nearest £100 million and ranked on the same basis. This means that the very smallest lenders, those with under £50 million of lending, do not feature in the figures. The data accounted for some 97 per cent of the total mortgage market – as published by the Bank of England.
For 2017, gross lending totalled £257 billion, up four per cent on 2016. This was lower than the 11 per cent growth seen in 2016. However, within this UK Finance have seen increased competition for business. This year there are 65 lenders in their results for gross lending, up from 60 lenders the year before. The largest lenders saw more modest growth. Although Lloyds has continued to increase lending activity with a seven per cent rise compared to 2016, the next three lenders on the table (Nationwide Building Society, Royal Bank of Scotland and Santander) all saw lower volumes than in 2016, compared to the previous year and corresponding contractions in market share.
Despite this, there was no change in the top ten gross lending table, with all lenders retaining the same rankings as in 2016. Lloyds Banking Group remains at the top of the balances outstanding table, despite a decrease in book size of one per cent. RBS had an increase of seven per cent for their balances outstanding, allowing them to overtake Barclays on the table and become the lender with the fourth largest mortgage assets in the UK. Below the top five, HSBC, Coventry, Virgin Money and TSB all increased their market share of outstanding mortgage assets.
2017 was a good year for the mortgage market with more lenders competing for business, and gross lending continuing on an upward trend. In their our most recent market forecasts, UK Finance predicted gross lending of £260 billion in 2018 – an increase of about two per cent. Lending in the early months of 2018 has, so far, outpaced their forecasts, driven largely by stronger-than-expected remortgage activity. The uncertainties UK Finance set out last year – not least those relating to the UK economy – remain; these have the potential to affect the path of lending for the rest of this year and beyond. However, the market has shown this year that, yet again, it is competitive and robust enough to continue to help UK mortgage customers as their needs change.
