Fry had heard of some common types of fraud. In the more traditional scams, a criminal set himself up as an apparently genuine insurance adviser, complete with a shopfront and a variety of products, though motor insurance was favoured. Unsuspecting customers paid a premium and were provided with false documents giving the impression their car had been insured. In one variation, the illegal adviser simply advertised their services through a newspaper or on the internet, often targeting specific vulnerable communities. In London, the Metropolitan Police had arrested a man on suspicion of conspiracy to defraud and money laundering offences. He was alleged to have made thirty to forty thousand pounds a year by trading as an illegal insurance adviser, targeting members of the Chinese community and students.
Increasingly common were whiplash claims after car accidents, where the extent of injury was difficult for doctors to diagnose. Organised gangs operated ‘cash for crash’ schemes, staging collisions in which some unsuspecting motorist crashed into the rear of a vehicle that stopped suddenly with its brake lights disabled. Just like the cannabis gardeners, those at the bottom of the food chain in those schemes were often poor and ignorant immigrants, who were paid a few hundred pounds to put themselves physically in harm’s way. Any genuine injuries they sustained were collateral damage as far as the gang leaders were concerned.
‘Are we talking hard or soft?’ asked Baird.
‘I’m sorry?’
‘Basically, hard fraud is when someone deliberately invents a loss covered by their insurance policy. Criminal gangs get involved in hard fraud schemes, because they can obtain large amounts of money. Soft fraud is far more common. It’s more opportunistic. Policyholders exaggerate an otherwise legitimate claim. Almost anyone can be involved in that type of fraud. It’s so tempting just to overstate the amount of damage or the value of items lost. And of course, most small frauds go undetected, so it’s known as an easy crime to get away with.’
Fry shook her head. ‘Not soft fraud. There must be large amounts of money involved.’
He bit his lip. ‘I see.’
‘Those gangs who stage collisions to collect insurance money. The set-up sometimes involves insurance claims adjusters, doesn’t it? They create phoney police reports to process claims.’
‘It’s possible,’ said Baird slowly.
It was an evasive, noncommittal reply, if ever she’d heard one. Fry waited in silence for him to say more.
‘The sheer number of claims submitted each day makes it far too expensive for companies like ours to have employees checking each claim for signs of fraud,’ he said. ‘So we use computer systems and statistical analysis to identify suspicious claims for investigation. There are drawbacks.’
‘Such as?’
‘The system can only be used to detect types of fraud that have been identified before. Claims adjusters can be trained to identify “red flags” or symptoms that in the past have often been associated with fraudulent claims. Statistical detection doesn’t prove that claims are fraudulent. It merely identifies claims that need to be investigated further.
‘If a red flag is triggered on a claim, it’s passed on to a specialist loss adjuster to investigate. They’ll interview the policyholder, carry out background checks. Often the result of our fraud checks and an investigation is that the claim process becomes a bit long-drawn-out. Then some claimants simply withdraw their claim, and we never hear from them again. That’s a result too.’
‘An unscrupulous staff member could take advantage of that system,’ said Fry. ‘Meeting claimants and doing background checks – it puts someone in a position of power. Some individuals can’t resist abusing that sort of power.’
‘We participate in the Insurance Fraud Bureau scheme,’ said Baird. ‘Any legitimate insurance company would be mad not to. The IFB have recorded tens of thousands of staged collisions and false insurance claims across the UK. In one year, their use of data mining led to seventy-four arrests of individuals involved in insurance fraud networks.’
‘Data mining. Would that be in the job description of a fraud analyst?’
‘Like Ralph Edge?’
‘Yes, that’s who I’m thinking of.’
Baird looked suddenly alarmed. He stared out of the window as a defeated-looking Ralph Edge was led past his office by two men, each with a hand on an elbow. Fry jumped up and went to the door to watch them disappear down the corridor.
‘Who were they?’ asked Baird.
‘Those,’ said Fry, ‘were two of my colleagues from the Major Crime Unit. They appear to have arrested Mr Edge.’