Interview with...BOBBy GRacEyCharlotte Parkinson, Modern Claims, spoke to the Chairman of the Chartered institute of Loss adjusters’ (CiLa) anti-Fraud Special interest Group (SiG) about adopting a collaborative approach to fraud and protecting the rights of the honest consumer.

QWhy did the Chartered institute of Loss adjusters (CiLa) decide to establish an

anti-Fraud SiG?

aThe CILA created 11 Special Interest Groups, including the Anti-Fraud SIG, in 2005. The

purpose was to enable all members to be associated with those who are practising in, and have expertise in, one of the specialist claims areas. Today, nearly 450 CILA members are part of the Anti-Fraud SIG where they share best practice, seek advice in a non-competitive environment, access technical publications and speak to leaders in the field. The Anti-Fraud SIG liaises with various industry groups, including the ABI Anti-Fraud Committee on benchmarking fraud performance, the Insurance Fraud Bureau and working with the police. In addition, the group responds to the consultation process of, for example, the SIA following the introduction of the Security Industries Act. Internally, the SIG regularly reviews the CILA exam syllabus to ensure that the Institute’s qualifications include the right technical information on fraud, for example, legal definitions, relevant case law. The SIG’s involvement with other industry qualifications has helped members with these qualifications to embark on their qualification journey with the CILA.

QWhy did you want take the position as Chairman of the SiG?

‘Public perceptions about combating fraud also need to be addressed, as many consumers do not believe that any real progress has

been made’

aNearly four years ago, I was asked to take over from Robin Wintrip as Chairman of the

SIG. I was delighted and honoured to do so and jumped at the chance! I am passionate about fraud so to work with a fantastic group of professionals who are also very passionate is a pleasure. The position of Chairman of the Anti-Fraud SIG is a voluntary one

which is highly regarded and keeps me in touch with adjusters and claims professionals who deal with fraudulent claims on a day-to-day basis.

QHow does the SiG liaise with organisations such as the aBi’s anti-Fraud Committee?

a Working with other organisations involved with fraud can be challenging when

sharing best practice and data within the confines of the data protection act. The key is to look beyond this and centre on what’s best for the customer. Over the past few years, we have worked on a number of projects with the ABI’s Anti-Fraud Committee, such as best practice, and have developed a good working relationship with them. In fact, one of their members is joining our next SIG meeting, which will be mutually beneficial to both groups.

QHow has fraud in the industry changed since the SiG was established, and over the

last few years, in light of regulatory/market changes?

a Over the past 10 years, the insurance industry has improved its general approach

to fraud and has tried to create an anti-fraud culture from the top down. There is more executive buy-in as senior personnel start to acknowledge the relationship between the cost

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11Interview with... Bobby Gracey

‘The insurance industry has made tremendous

progress but there is still much to be done. We tend

to be good at what we know, such as detecting organised fraud, but we

need to get much better at opportunistic fraud which

is far harder to detect’

of fraud and loss ratios. Additional resources are now dedicated to combatting fraud and the industry is making better use of technology. Fraud is now a sector within the insurance industry instead of just an add-on to claims. However, the journey isn’t over. Although the industry has made progress in preventative fraud by learning new scams or ploys, or reacting by understanding more in regard to external motivators, more needs to be done and support given by the Insurance Fraud Enforcement Department with regard to opportunistic fraud, which still remains the biggest problem for the insurance industry. Public perceptions about combating fraud also need to be addressed, as many consumers do not believe that any real progress has been made.

QHow does the organisation aim to put the ‘honest consumer’ at the heart of

what it does by routing out fraud?

a The CILA’s ethos is to ensure that members of the public are treated fairly and that their

rights and status are protected. When an adjuster undertakes investigative work, often on behalf of insurers, he comes to a fair conclusion about whether a claim is covered by a policy, the quantity of loss or damage, and the amount that should be paid. He is recognised as a professional person of integrity with a high level of knowledge and skills who is subject to a code of conduct, which embraces the principles of impartiality and transparency. The need to act fairly and justly is one of the key requirements of the CILA charter and a core principle of the profession. The institute provides strict guidance to its members on conflict of interest, business ethics and confidentiality. The CILA sets the standards of the profession and protects those standards. The Institute’s associate qualification conferring chartered status is the gold standard in the industry and is respected worldwide.

From an insurer’s perspective, it is important that claims handlers know what ‘good’ looks like. An ‘honest consumer’ will pass effective checks, have no red flags against them and present minimum risk, and these consumers’ claims should be paid. A small percentage of consumers will be referred for further investigation such as social media checks, face-to-face statements, and surveillance.

Bobby GraceyBobby Gracey started working in the insurance industry in the early 1990s and over the course of his career, he has focused on working with global customers to develop and manage multi-national investigative programs and cost containment solutions. For the past 15 years, Mr Gracey has held a number of senior global executive positions including Global Vice President for Counter Fraud Solutions at Crawford & Company where he strategically managed that part of their business in 67 countries around the world, CEO for an International forensic business and Executive Vice President for a leading US Claims Investigation company.

Eighteen months ago, Mr Gracey set up MolMax Solutions Ltd, a company that provides executive and strategic support to organisations in the UK and Ireland. He also assists various International companies with their business development efforts and expansion plans.

Mr Gracey continues to remain active in the counter fraud community. To date he has written three technical books on counter fraud, which are used as key reference materials by operational fraud investigators, the Association of British Insurers, Chartered Insurance Institute and Lloyds of London.

‘An ‘honest consumer’ will pass effective checks, have no red flags against them and present minimum risk, and

these consumers’ claims should be paid’

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‘It remains imperative to have a collaborative approach with all organisations and invite member feedback on a regular basis in order to effectively fight against fraud’

QHow well has the insurance industry as a whole responded to fraud?

aAs mentioned, the insurance industry has made tremendous progress but there is still much

to be done. We tend to be good at what we know, such as detecting organised fraud, but we need to get much better at opportunistic fraud, which is far harder to detect. Other areas that need addressing include: improving the measurement of fraud by using definitions that are common to all; better incentivisation of adjusters to investigate fraud more thoroughly which can be time consuming and labour intensive; more collaborative training between insurers and adjusters; an industry wide recognised professional qualification in fraud.

Qdoes the CiLa and other organisations do enough to support the industry/

members in the fight against fraud?

aOver the past 10 years, the CILA’s Anti-Fraud SIG members have been sharing

best practice, seeking advice from fraud experts, accessing technical materials and attending and speaking at fraud conferences. But more support is needed: in a CILA survey, our members stated that they would like the industry to do more to share topical news in fraud, trends and examples of good practice. They felt that it was often difficult to locate with ease data, intelligence and guidance on best practice when tackling fraud. In addition, when information was found, it was not focussed on the day-to-day practicalities of adjusting or investigating fraud. A big challenge for the industry is to create one singular best practice as different organisations have varying opinions. But it remains imperative to have a collaborative approach with all organisations and invite member feedback on a regular basis in order to effectively fight against fraud and this approach is at the core of the Anti-Fraud SIG.

QWho is/should be responsible for investigating and tackling fraud and what is the Loss

adjusters role here?

a Everyone in an organisation should be fraud aware and those directly involved in the

claims process should understand how to detect risk and refer, where appropriate, to a specialist person or team who can take the investigation to a different level. However, not all staff and, in particular, claims staff are given sufficient specialist training to make decisions on potentially fraudulent claims. The loss adjuster’s role, as mentioned previously, is to validate genuine claims - is the claim covered by the policy, what is the quantity of loss or damage and how much should be paid? When risk is detected, the adjuster then refers the claim to a specialist in-house fraud team or to an insurer’s team.

QWhat is next for the CiLa and the anti-Fraud SiG?

a Preparations are underway for the CILA’s annual conference in September, which will

showcase how the Institute and its members are responding to an ever changing market place. Claims professionals from all sectors of the wider industry will attend this highly informative event. The CILA’s Anti-Fraud SIG will be represented at the conference where members will share topical news in fraud, trends and examples of good practice. Away from the conference the SIG will continue to work with members in order to remain relevant. And it will try and build even stronger relationships with other industry bodies in order to create a single solution rather than individual strategies to fraud.

The Chartered institute of Loss adjusters (CiLa)

The CILA is the UK’s leading professional organisation for independent claims specialists. Its members operate under a royal charter to investigate, negotiate and agree the conclusion of insurance and other claims on behalf of insurers and policyholders. CILA’s commitment to setting standards, examinations and professional conduct enables it to support all members across the industry. The institute ensures that all members comply with standards and actively encourages more to achieve advanced levels of technical and professional competence.

‘[The CILA] will try and build even stronger

relationships with other industry bodies in order

to create a single solution rather than individual

strategies to fraud’

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13Interview with... Bobby Gracey