The link between fraud and organised crime is revealed by the example of a drugs gang in a big English city.
The people that we are finding and identifying at the heart of these particular frauds aren’t just working alongside the drug engineer insurance liability professional
, they are the drug traffickers
Chris Hill, Norwich Union
The criminals have contrived hundreds of car accidents in which they lured members of the public to crash into the gang’s cars.
“The scale of this operation is enormous,” Chris Hill said.
“This gang had induced more than 400 accidents in the course of a year.
“Witnesses appear out of nowhere and they typically target women or the elderly because it’s easier to get an admission of liability on the spot from them.
What follows is a claim both for themselves and frequently for fictitious passengers, for personal injury against the innocent party’s insurer.
“The people that we are finding and identifying at the heart of these particular frauds aren’t just working alongside the drug traffickers, they are the drug traffickers” Mr Hill said.
What is going wrong?
Norwich Union’s research reveals a deep frustration at the inability - and sometimes unwillingness - of the police to take action.
The Norwich Union says it struggles to get any of its cases prosecuted, despite often providing masses of evidence, investigated by lawyers, and served up to the police as a complete case.
As a result, fraudsters are getting away with their crimes, commercial insurance liability themselves and coming back a second and third time for more.
According to the insurer, this situation is mainly because fraud is the one major crime for which the government does not set police targets.
So police forces - with the exception of the City of London force and the Metropolitan Police - simply don’t devote enough money and resources to dealing with it.
Last year the Norwich Union detected 4,000 clear cut cases of fraud against itself.
But because of low take-up rates by the police it presented the authorities with only 41 of these cases - so called “super-frauds” involving significant public interest or organised crime.
Of these cases, only 18 were taken to court, although all the prosecutions were in fact successful.
But even then, fewer than half of these cases led to prison sentences.
Norwich Union says that most UK insurance firms, and many banks, now simply don’t bother to report most of the frauds they discover.
This lack of effective penalties is one reason, Mr Hill says, why fraudsters persist with their schemes.
The problem is the hundreds of millions of pounds that are being salted away which is being used to finance other forms of criminality
The clearest problem is that if fraudsters do get caught they usually get to keep their money.
To stop fraud being low risk and high reward, the authorities must establish the principle that the fraudsters pay back their stolen money, Norwich Union argues.
“We have to get away from the idea that people can serve their time, fly off to an island in the Pacific and live the life of reilly,” Mr Hill said.
“Where we get those convictions the financial debt should stay with them, and we should recover the money in a more consistent and aggressive way.”
The criminal revenues being salted away can then be recycled into fresh criminality - or simply taken as profits.
The government has made recapturing the proceeds of crime a priority, and created new powers with the 2002 Proceeds of Crime Act.
The act is widely appreciated by police economic crime investigators - but its use remains patchy, as a 2004 HM Inspectorate of Constabulary report showed.
The people that we are finding and identifying at the heart of these particular frauds aren’t just working alongside the drug engineer insurance liability professional
, they are the drug traffickers
Chris Hill, Norwich Union
The criminals have contrived hundreds of car accidents in which they lured members of the public to crash into the gang’s cars.
“The scale of this operation is enormous,” Chris Hill said.
“This gang had induced more than 400 accidents in the course of a year.
“Witnesses appear out of nowhere and they typically target women or the elderly because it’s easier to get an admission of liability on the spot from them.
What follows is a claim both for themselves and frequently for fictitious passengers, for personal injury against the innocent party’s insurer.
“The people that we are finding and identifying at the heart of these particular frauds aren’t just working alongside the drug traffickers, they are the drug traffickers” Mr Hill said.
What is going wrong?
Norwich Union’s research reveals a deep frustration at the inability - and sometimes unwillingness - of the police to take action.
The Norwich Union says it struggles to get any of its cases prosecuted, despite often providing masses of evidence, investigated by lawyers, and served up to the police as a complete case.
As a result, fraudsters are getting away with their crimes, commercial insurance liability themselves and coming back a second and third time for more.
According to the insurer, this situation is mainly because fraud is the one major crime for which the government does not set police targets.
So police forces - with the exception of the City of London force and the Metropolitan Police - simply don’t devote enough money and resources to dealing with it.
Last year the Norwich Union detected 4,000 clear cut cases of fraud against itself.
But because of low take-up rates by the police it presented the authorities with only 41 of these cases - so called “super-frauds” involving significant public interest or organised crime.
Of these cases, only 18 were taken to court, although all the prosecutions were in fact successful.
But even then, fewer than half of these cases led to prison sentences.
Norwich Union says that most UK insurance firms, and many banks, now simply don’t bother to report most of the frauds they discover.
This lack of effective penalties is one reason, Mr Hill says, why fraudsters persist with their schemes.
The problem is the hundreds of millions of pounds that are being salted away which is being used to finance other forms of criminality
The clearest problem is that if fraudsters do get caught they usually get to keep their money.
To stop fraud being low risk and high reward, the authorities must establish the principle that the fraudsters pay back their stolen money, Norwich Union argues.
“We have to get away from the idea that people can serve their time, fly off to an island in the Pacific and live the life of reilly,” Mr Hill said.
“Where we get those convictions the financial debt should stay with them, and we should recover the money in a more consistent and aggressive way.”
The criminal revenues being salted away can then be recycled into fresh criminality - or simply taken as profits.
The government has made recapturing the proceeds of crime a priority, and created new powers with the 2002 Proceeds of Crime Act.
The act is widely appreciated by police economic crime investigators - but its use remains patchy, as a 2004 HM Inspectorate of Constabulary report showed.
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