The insurance industry's use of databases to prevent and detect fraud, and improve recoveries

The methods by which insurance fraud are perpetrated include: over insurance; multiple insurance; suppression of information; conversion of uninsured to insured; faking of loss; deliberate loss by policyholder or agent; loss exaggeration. These and other types of fraud can be tackled with the use of centralised databases such as CUE (Common Underwriting Exchange) set up by the ABI. The use of databases is not only to be able to match and investigate claims. Uses can include replacement costs, costs of repair of vehicles and as identification systems are used to tag items, (which are not easily identifiable such as contractors plant and equipment, jet skis etc.). We are building up not only negative databases, ie. of stolen items, but also of positive databases, ie. of ownership. For example virtually all motorcycles are now tagged and the police issued with readers. Only with these are we likely to be successful in the efficient prosecution of fraud which must be better than disputing claims where we strongly suspect fraud but are wary of alleging it because of the higher burden of proof required in criminal as compared to civil cases.