With PMI fraud hitting the headlines, Nicola Culley investigates the size of the problem.
“The industry is waking up more to the problem. In general insurance the big insurers are 10 to 15 years more advanced with dedicated fraud units,” Winnart said.
“This area is a lot bigger than we think it is. When I started in this industry in the mid-1990s, fraud focus did not exist. Then there was a rapid growth of activity. It has been down to an awareness of the issue, as opposed to more fraud suddenly going on.”
He adds that there has been five times more fraudulent activity in cash plans than perceived since 2011 and points out that there is generally also more fraudulent activity in a recession.
According to Winnard, for intermediaries, PMI fraud can be very difficult to tackle. He says: “It is technical in nature but also sensitive, because it is people’s health and problems that they are dealing with. Non-disclosure can often be very difficult for the adviser, too, because they have probably helped the client fill the forms out.
“The first person the client reverts to in these cases is the adviser. The insurance industry has also, in the past, been quite poor in communicating what it is doing to tackle all of the problems.
“There is also an element of grey area when it comes to application forms. The insurers can do more to work more closely with advisers, and be more clear and transparent. I appreciate that it can be hard for advisers to work with insurers when all the terms vary from one to the next.”
Winnard says the first natural question for most people is: “Fraud? Healthcare? Really?” But he adds that bit by bit the industry had woken up to the issues. He has vast experience in insurance fraud with a background of positions at PruHealth, Standard Life and Bupa. He says that both PruHealth and Bupa have grown their fraud teams considerably in recent years.
Bupa now has an team of accredited counter fraud specialists to investigate possible fraud. Their job is to review all allegations of fraudulent or inappropriate billing or claiming.
Dr Annabel Bentley, medical director at Bupa Health Funding, says: “In the past, the emphasis of fraudulent PMI claims was on inappropriate billing from providers.
However, system enhancements over the years have allowed us to detect and eradicate instances of mis-billing by providers, in particular unbundling of procedure codes.
“The cost of fraudulent claims could impact health insurance premiums if it goes undetected.”
In 2001, the leading providers in health insurance joined together to form the Health Insurance Counter Fraud Group (HICFG). It works towards sharing best practice and information between companies to counter the threat of fraud to the industry.
And in the last year, the Association of British Insurers (ABI) also joined forces with the City Of London Police to help fund a specialist team known as the Insurance Fraud Enforcement Department (IFED) that will take on and action cases of insurance fraud referred by the industry, including health insurers.
What is promising, when looking at the industry’s growing fight against PMI fraud, is that Bupa has referred a number of cases to IFED, which have led to criminal investigation.
And in 2011, AXA PPP campaigned about some deficiencies in the regulatory system – specifically doctors retiring to avoid charges against them being heard – and some of the publicity generated reached the House of Commons Health Committee.
Although perhaps behind its general insurance neighbour, the industry is switched on to the problem and is heading in the right direction in its developing fight against PMI fraud.