As the single biggest type of crime in England and Wales, causing misery to millions and often affecting the most vulnerable, fraud is a key issue the new government will need to tackle. We were pleased to see an awareness of the threat posed by fraud in the Labour manifesto, where they committed to a “new expanded fraud strategy to tackle the full range of threats, including online, public sector and serious fraud”.
It's important that the threat posed by insurance fraud is front and centre of the government’s thinking, especially given that in 2023 insurers detected insurance fraud worth £1.1 billion. As outlined in our Industry Manifesto, our headline ask of the new government is Continued cooperation between government and industry to tackle fraud and financial crime, for example through collaboration with government and law enforcement agencies and consumer awareness campaigns in conjunction with the Home Office. To ensure the new government’s counter fraud strategy is comprehensive, agile and responsive to changing threats and circumstances, we are urging the government to consider the following:
Ensure a joined up approach to tackling economic crime
Tackling fraud requires a collaborative and joined up approach between all those with skin in the game, be that between the private and public sectors, within the private sector and within the public sector. The different parts of the public sector must be united in their efforts to tackle fraud swiftly. While we welcome the appointment of dedicated ministers for economic crime and fraud respectively, it’s imperative the government’s efforts to tackle economic crime are coordinated and drive forward collaboration between the public and private sector.
Publish Insurance Sector Fraud Charter
A core lever of the previous government’s UK Fraud Strategy was developing fraud sector charters. There are voluntary agreements between industry and government, to improve counter-fraud capability. Charters had already been agreed with the retail banking, accounting, telecommunications and technology sectors. And we've been working hard with the Home Office and Joint Fraud Taskforce (JFT) to develop an insurance sector charter, containing a number of insurance and public sector commitments that will make the UK even more resilient to insurance fraud. The commitments align with the industry’s counter fraud strategy and cover consumer awareness, victim support, professional enablers, data sharing and illegal insurance intermediaries. We encourage the new government to prioritise agreement and publication of the Insurance Sector Fraud Charter as soon as possible.
More action needed against social media & technology companies who let fraud occur on their platforms
Consumer awareness of online scams is low, and our recent campaign was intended to boost their understanding and prevent them from falling victims to different types of fraud. By using case studies, digital adverts and partnering with influencers the campaign was intended to help customers spot the signs of fraud and know how to avoid it. But raising consumer awareness will not stop the issue on its own. There needs to be more action against social media and technology companies on whose platforms these scams occur to incentivise them to act now to reduce fraud.
While the Online Safety Act will improve consumer protection, the measures will take time to come into effect, so the Online Fraud Charter will play an important role in the meantime. However, the Charter is voluntary and does not go far enough to incentivise these firms to act now to reduce the fraud occurring on their platforms. We were therefore pleased to see the new government has committed to “work with technology companies to stop their platforms being exploited by fraudsters”. As part of this, we would encourage the government to review progress made by companies signed up to Charter and take action against those who have failed to implement measures.
Enhance information sharing between the private sector and government
The irregularity in data sharing between the private sector is a key barrier to building a whole system, data driven response to tackling fraud. We urge the government to work with the private sector to understand uses of and barriers to information sharing between the private sector and government, in particular engaging with us on any proposed data strategy to better prevent, detect and pursue economic crime.
Part of this is ensuring victims are able to report fraud effectively. Our experience of the UK’s fraud reporting service, Action Fraud is not particularly positive, as so few referrals are progressed to investigation and criminal charge. It’s imperative that the next iteration of Action Fraud is fit for purpose, with law enforcement focussed on priority cases and referrers being kept updated of progress.
Ensure there is sufficient deterrent to would be fraudsters
We welcome the new government’s manifesto commitment to “ensure the [police] service is organised so as to enable investment in specialist capabilities, such as digital forensics, and to more effectively tackle cross-border issues such as serious organised crime”. The insurance sector has for many years made significant investment in improving law enforcement specialist capability. Since 2012, we have invested more than £45 million in the Insurance Fraud Enforcement Department (IFED), a specialist police unit dedicated to tackling insurance fraud. IFED's team of detectives, financial investigators and police staff act with operational independence while working closely with the insurance industry. IFED targets established criminality, including organised motor insurance fraud, while at the same time focusing on emerging threats. Since IFED’s inception, they have carried out over 3230 arrests and voluntary attendances, secured more than 650 convictions and around 1,660 other judicial outcomes amounting to around 320 years of prison time. However, IFED cannot enforce against insurance fraud alone, so current measures such as investment in the new National Fraud Squad and upskilling detectives in local forces and regional organised crime units are welcome. It’s important that the proposed ongoing recruitment of new officers is maintained by the new government as these measures will provide improved opportunities for intelligence sharing and tackling organised crime.
Investment in law enforcement capability to investigate insurance fraud needs to be accompanied by a sufficient deterrent for committing fraud. Organised fraudsters, who commit fraud for a living will only be deterred if they are deprived of their liberty and lifestyle. The current Sentencing Guidelines for Fraud are meant to place the victim at the centre of consideration when determining the appropriate sentencing level, recognise the serious physical harm that insurance fraud can cause and put sentencing periods on a par with crimes that had traditionally seen tougher sentences (e.g. banking fraud). However, while some significant sentences were handed down for insurance fraud in the immediate wake of the new Guidelines in 2014, custodial sentences are becoming rarer and when they do happen, are invariably relatively short. We urge the new government to review the sentencing guidelines to ensure they provide sufficient deterrent to would be fraudsters.
Insurance fraud is a complex and dynamic issue that continues to present a serious threat to the UK’s prosperity and security. It requires a whole system approach, so collaboration and cooperation in the fight against it is crucial. It’s imperative the government prioritise the fight against fraud and work in partnership with industry. We are fully committed to working with the government to shape their new expanded fraud strategy and drive change in the fight against fraud.