The launch of the Insurance Fraud Register (IFR) has been put back to the third quarter of 2012, according to a report in this week’s Post Magazine. In the report, Richard Davies, the IFR project lead and AXA UK’s group fraud risk manager, describes sector wide projects such as this as ‘like herding cats’. Davies went on to stress that the IFR had to be trustworthy and that customer acceptance was very important, with the Financial Ombudsman Service and the consumer association Which? listed as organisations the IFR want to have on-side for its launch.
While I’m sure that the FOS and Which? may be happy to make polite noises about an insurance fraud register in general being a good idea, I would be very surprised, given the mandate of each organisation, if either came out strongly in favour of the IFR per se. There are just too many unknowns at the moment; too much to be taken on trust.
Having a consumer organisation or two ‘on-side’ is a ‘nice to have’, but it is no substitute for consumer representation on the governing bodies of both the IFR and the Insurance Fraud Bureau. That is something that both the IFR and IFB can resolve in this second quarter if they put their minds to it.
Davies went on to voice this concern:
It is not my fear of being sued that keeps me up at night, but someone with a very active Twitter account trashing the IFR and the industry. So if someone thinks they are going to load Sir Alan Sugar on the IFR on day one, would they please be very, very careful.
Given an estimate early last year of there being 7 million active, unique users of Twitter in the UK, I suspect he won’t have long to wait before his worst fears come true. I’ve posted before about some of the basic steps that the IFR needs to complete before going live, such as agreeing on cross-sector definitions of fraud and proven, as well as audit procedures to ensure compliance with those definitions. That’s not being careful; it’s doing the basics.
It’s important when reading about the impact of the recent IFR pilot to differentiate between its impact on underwriting fraud and on claims fraud. Most of the sector’s efforts todate have been on claims fraud, although some insurers are now turning their attention to the underwriting fraud side as well. The IFR delivered this headline about the underwriting fraud identified by its pilot: that a “shocking” 92% of underwriting fraud matches discovered would have gone undetected by insurers. It is shocking in one sense, but other senses are questioning what the IFR is classifying as ‘underwriting fraud’. Given that the IFR went on to discuss each of those matches with the five pilot insurers, it also makes me wonder just how many cases these statistics have been based upon. Now I may be in danger of reading too much into one article: if so, then I hope the IFR opens up and publishes more about its progress. Greater transparency will earn it more trust.
While I have concerns about how the IFR is being implemented, I have absolutely no doubts about the value it represents, properly implemented, to the insurance buying public. Richard Davies has a huge task ahead of him and I wish him every success.