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01 February 2016
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Fraud ring busted by joint effort insurers

In January of this year, 22 persons stood trial on Malta for their involvement in an extensive insurance fraud case. The fraud ring was brought to light relatively quickly because the involved insurance companies share data amongst each other. From this data, patterns emerged that pointed towards fraud.

A fraud ring is not born overnight. The case of the Malta fraudsters very likely started with one valid claim between an islander and a tourist with a rental car. The accident luckily only caused material damage, the tourist was the guilty party and the insurance company had its administrative processes in order. In short: an easy case.

Malta skyline (thumb)The Maltese man, we will call him Matteo, files a claim but does not get the damage fixed. Instead he pockets the money from the paid claims. He tells a friend, who is attracted by the easy money and suggests that they stage a similar accident. They choose a different insurance company and the second claim is also paid. Suddenly, Matteo and his friend have lots of easy money to spend and other people are starting to notice.

This is how a network of friends and acquaintances comes into being, consisting of people who borrow each other’s vehicles to cash in on fake claims. Accidents are staged and several people claim the same damages from multiple insurers. As often is the case with such events, it escalates rather quickly. Why put all that effort into bodywork damage worth a few hundred euro? The amounts rise and even soar to a fictional total-loss worth of € 27,000.

The fraud case on Malta was spread over eight insurance companies that are all a member of the Malta Insurance Association (MIA). This branch organization uses our technology to share claim data on the Malta Insurance Fraud Platform. The software is developed to share documents and data within a country. In larger quantities of data it is easier to recognize patterns. Therefore, the Maltese insurers discovered relatively quickly that the same vehicles were involved in different claims. Also, multiple fraud indicators could be handed to the Maltese police who went to work decisively to collect evidence for the criminal case.

This brings us to the following matter: Matteo and his friends were caught but they are not the only fraudsters on Malta. Their ‘colleagues’ are still active and what is stopping them to go international? Will they limit themselves to personal vehicles or do they progress to international freight traffic? We know how fast insurance fraud can escalate and that makes prevention a top priority. The sooner fraudulent claims can be detected, the smaller the losses are for the insurers and the less pressure there is on premiums. The longer fraudsters are allowed to do what they want, the more complex their networks become. This makes it harder to collect the proper evidence and lowers the chances of successful prosecution. In addition, expanding fraud rings are not bothered by country borders. For those fraudsters, borders are actually attractive since the international sharing of data between countries is yet far from common.

For all these reasons, it is very important that insurance companies actively join forces and share their information both nationally and internationally. It is the only way to track, fight and control organized fraud.

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