Here is another example of a fraud I have come across and some comments on how to reduce the risk of similar things happening in your business.

An insurance broker added elements to genuine claims as he forwarded them to the insurers.  These included injuries, additional passengers, and car hire.  He always had the cheques or other payments made to him, from which he paid the claimants, keeping large profits for himself.  He colluded with:

  • A car-hire firm.
  • A solicitor.
  • A doctor, producing phoney medical reports on demand.

He was aware that different insurers had different practices regarding investigating claims.  He always ensured he kept his claims just below the threshold.  He was caught when a claimant contacted his insurers direct and was amazed to learn of all the payments they had made to him for his minor accident.  He and they went to the police.

Even if you are not in the insurance business, think how this could apply to you.

These are some controls you could apply.

  • Avoid letting one person channel all payments through himself.
  • Do not have a rigid policy for investigating anything.
  • Be suspicious if someone always uses the same subcontractors, e.g. the car-hire firm and the doctor.
  • At least sometimes, insist on bypassing the middle-man and speak to the end client.