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Terrorism and insurance fraud 'significantly linked,' says British experts


Fraud experts have uncovered "significant" links between insurance fraudsters and terrorist groups, but wider publicity of the issue by the industry is being prevented amid police concerns.

Market views on instances of insurance fraud funding terrorism were aired following a speech by Metropolitan Police commissioner Mark Rowley at the British Bankers' Association conference in late September, in which he claimed "a third of counter-terrorism policing", as measured by arrests, was fraud-related.

In particular, Rowley linked false claims on home and motor insurance policies to the travel of radicalised British Muslims to join the Islamic State movement in Syria and Iraq.

One senior fraud source told Post links between terrorism and fraud are widely recognised in the insurance industry. "We all know this type of activity is funded in various ways," they said. "I have little doubt some of the things we have looked at will have links with terrorism, but the fact of the matter is that while it is hinted at, details of those investigations and their specifics are very rarely shared.

"We have tried to [publicly] make the link on some cases. That would be a big change from a consumer-awareness perspective but, because of the potential risks around it, it's one of those areas where we follow what the police want to do, and they have quite a few concerns."

Describing links between fraud schemes and terrorist groups as "significant", Absolute Partnership data and intelligence director Dr Stephen Hill said: "We have challenged on many occasions the notions of fraud being a victimless crime, and we know it is funding terrorist activities.

"As well as making money for individuals, we know from all the stats that a big segment of [fraudulent activity] goes to fund terrorist activity.
"The typical crash-for-cash scams have been used as a vehicle because it's an easy win. It's the same thing with credit card fraud," Hill added, noting that collaboration between police forces has increased since the establishment of the National Fraud Authority in 2008.

Terrorist connections

Asked by Post if his firm had uncovered fraudulent claims that were later linked with financing terrorist activity, Edward Frost, claims fraud manager at Axa commercial lines and personal intermediary, said: "What we can say is we have had experience of claims from individuals where fraud is suspected and [the claim has been] declined, and it has become apparent following subsequent police investigation that there may have been connections to known terrorists."

On the type of fraudsters expected to be associated with funding terrorist groups, Frost added: "Historically it has been seen as more likely to be orchestrated by organised groups of individuals, manifesting itself as organised fraud activity such as crash for cash.

"However, recent public statements by Rowley to raise awareness have brought to the attention the potential for radicalised individuals working on their own without support networks, considering standalone attempts at fraud to fund their activity.

"This clearly should only seek to strengthen the resolve of all insurers to tackle fraud at all levels."

Covéa head of financial crime Steve Jackson added that while he is unaware of individual instances of fraud being directly tied to terrorism, such activity would be unsurprising.

"There is no doubt fraud is used to fund other criminal activity so, naturally, why not terrorism?" he said. "[Insurance fraud] is a vehicle for channelling funds. But if you have an effective counter-fraud policy in the first place then it will stem the flow of funds into terrorism."

Questioned on how agencies collaborate, DCI Dave Wood, head of the City of London Police's Insurance Fraud Enforcement Department, told Post: "Ifed has no current investigations or trials relating to the funding of terrorism through insurance fraud. If evidence were provided, the unit would investigate involving other authorities as appropriate."
The Metropolitan Police was unavailable for comment.

Growing concern around a link between insurance fraud and terrorism coincides with the UK government's proposal to increase its Pool Re fee, with a levy forecast to rise from 10% to 30% of the commercial property terrorism fund's annual premium income, which is paid by the insurance industry.

The majority of insurers operating in the UK commercial property market are members of Pool Re and it had been suggested that an increased charge by government - which would make up the shortfall if an attack exhausts the pool - could filter through to members and consequently policyholders.

Simon Kilgour, insurance and reinsurance group partner at CMS, questioned the timing of the government's proposal to increase its Pool Re charge: "It is presently unclear if the increased levy is merely part of a general revenue-raising campaign or is representative of a more specific concern about the heightened long-term risk of significant terrorist attacks against commercial property."

HM Treasury has denied that its plans to generate a greater return from Pool Re will inevitably result in increased prices for member insurers. A spokesman said: "If Pool Re were to propose an increase to the price it charges its members, this proposal would, as now, be subject to HM Treasury agreement."

Source: http://www.insurancefraud.org/

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