FSA Launches New Initiative To Tackle Crime In UK Insurance Industry

by Robin Pilgrim, LawAndTax-News.com, London

08 March 2007

Under a new system introduced by the UK's Financial Services Authority, insurance firms and intermediaries are being called on to inform the FSA when they suspect criminal behaviour, so that the regulator can decide whether to investigate further.

Situations in which a reporting need may arise could include when an insurer terminates an agency agreement with an intermediary where they see doubtful practice or suspect misconduct, or where an insurance intermediary has concerns about another intermediary they do business with.

Stephen Bland, Director of Small Firms at the FSA, explained that:

"We are looking to all insurance firms to participate in this scheme and help us beat criminal financial activity in their industry. We want to know when a firm has suspicion or evidence of malpractice so that we can act on it where appropriate. We hope that by sharing intelligence in this way, we can work together to reduce financial crime. This action mirrors the mortgage fraud reporting system which has already produced good results."

Nick Starling, Director of General Insurance and Health at the Association of British Insurers, commented:

"Insurers do all they can to combat financial crime. We welcome the FSA’s initiative – it will provide insurers with a simple point of contact to raise concerns. I would urge insurers to continue to support the FSA in tackling financial crime and report criminal activity they become aware of."

Firms reporting sispected misconduct are asked to supply the Financial Services Authority with the following information: the name of the firm; details of any individuals involved; details and evidence of the suspected and/or proven financial crime; the names of the customers involved; and a summary of investigations.

Examples of possible financial crime involving insurance fraud include:

• Misappropriation of client money or money held under risk transfer agreements;
• Failure to pass on premiums, refunds or claims;
• Falsifying customer details to obtain insurance business that would otherwise be turned down or be more expensive; and
• Issuing false cover notes or false certificates of insurance.

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