Moore Stephens: Insurance Industry Should Tighten Loopholes

Moore Stephens have warned companies engaged in the insurance industry that they must put in place formal, anti-fraud structures, or risk being targeted both externally and internally. Writing in the firm’s Insured Interest newsletter, Moore Stephens’ Alan Tidy says, “There is evidence to suggest that there are potential gaps in the systems that the insurance industry has put in place to detect and eliminate fraud. “Historically, exposure to fraud in the insurance industry has been regarded as a comparatively low-level risk, and one most closely associated with claims. But today, with the massive growth in internet business, the risk can no longer be considered peripheral. “Exposure to the risk of fraud should form part of the overall operational risk management strategy which insurance companies and intermediaries need to have in place to operate efficiently and profitably. There are some fundamental rules to follow:

put in place a formal, anti-fraud strategy and embed it into the business process;

consider internal and third party, as well as external, fraud;

relate fraud prevention strategy to existing risk management and internal control procedures;

ensure consistent application of the strategy throughout your organisation, learning from the experience of other businesses in your sector and from the findings of organisations such as the UK ’s fledgling Insurance Fraud Bureau;

make sure that all sectors of your organisation are fully informed about product development cycles;

and provide adequate fraud management resources, implementing a procedure for investment in such resources.