UK claims-management companies could face bribery probes, London police warn

14 March 2018 10:54am

2 Mar 18. By Ben Lucas.

Insurance claims-management companies that fail to prevent bribery could face prosecution under the UK’s Bribery Act, the City of London police have warned.

The authority has ongoing bribery cases targeting the insurance sector and is “exploring” prosecutions in the claims-management industry, the head of the force’s insurance-fraud unit told MLex.

Andrew Fyfe, who became head of the City of London Police’s Insurance Fraud Enforcement Department in October, wants to use Section 7 of the 2011 bribery law, under which companies are liable to criminal prosecution if they fail to prevent bribery. Companies can deflect charges if they prove they had “adequate procedures” in place to prevent bribery.

The unit wants to target claims-management companies where employees pay bribes to obtain claims data from insurers. Fyfe said the companies often target young employees in the insurers’ claims-handling teams, paying bribes from “a few hundred pounds" to as much as “10,000 pounds.”

“I know that the legislation was, I suppose, intended for the likes of the big multinational conglomerates, however there’s nothing to stop that legislation being applied to much closer-to-home scenarios,” Fyfe said.

“We prosecute the insider, we tend to prosecute the people making the approaches, but the bribery legislation has a provision here which I think we should explore greater use of, particularly to try to do more to stop this activity going on,” he said.

The police have “live investigations” and are “absolutely exploring” the possibility of applying Section 7, Fyfe said. A force spokesman told MLex that there are eight ongoing bribery probes into this type of crime.

Fyfe stressed that police must get the consent of the head of UK’s prosecution authority, the Crown Prosecution Service, before being able to charge companies for failure to prevent bribery.

“That’s the big caveat before I say you’ll see convictions, or you’ll see a court hearing about this within a year or so,” said Fyfe. ​His force hasn’t yet approached the CPS about prosecuting a company linked to this type of bribery, he said.

The CPS told MLex it would consider any request made by police in accordance with the UK’s prosecuting guidelines, but said it wouldn't comment on hypothetical cases.

— Increase in leads —

The number of reports to police about bribery in the insurance sector is increasing, Fyfe said. “Most of them come directly from the insurance industry,” he said. City of London police have also received tip-offs from the Insurance Fraud Bureau, an industry-funded intelligence body, whistleblowers and other police forces, he added.

The force, which is responsible for policing London's core financial district, has handled three major bribery cases against individuals in the last two years, leading to eight convictions.

Last August, two businessmen and three former employees from the UK unit of German insurer Allianz were convicted for a bribery scheme. The two businessmen paid bribes of 250 pounds ($344) per week to the three insurance insiders for confidential data on customers who had been involved in vehicle collisions. Allianz wasn’t accused of any wrongdoing.

— Industry backs crackdown —

Fyfe said he has yet to meet with the claims management industry, but one industry body has welcomed his ambition to tighten the screws on the sector.

“I absolutely endorse any action that’s taken by any regulatory body or the police to clamp down on criminal activity and maladministration.” Nick Baxter, chairman of the Professional Financial Claims Association, told MLex. The organization represents major claims-management companies that deal with banking products such as payment protection insurance.

“We are all about promoting better behaviors, so whether that’s at a corporate level or an individual level we totally support it,” said Baxter.

Fyfe has met regularly with the insurance industry, which has backed his enthusiasm to stamp out bribery among claims-management companies, or CMCs.

“Rogue CMCs don’t just cause a nuisance, they can cause real economic harm through facilitating fraudulent and frivolous claims,” a spokeswoman for the Association of British Insurers told MLex.

“As well as fully supporting effective regulation of CMCs, it’s vitally important that enforcement action is taken, including shutting down those that engage in unscrupulous behavior outside of the law.”

	Eliot Gao